Financial Management Tips for Single Moms

Being a single parent is a challenging and rewarding journey. It comes with unique experiences, particularly when it comes to finances. Balancing the responsibilities of parenthood, work, and managing a household can be a formidable task.

The Stats SA General Household report revealed 41,8% of the households in South Africa were headed by women. Approximately 7.2 million South African women are either the sole or the main income earners in their families.

Much like the rest of the world, the typical South African family structure has changed over the years. The prevalence of single-parent families is on the rise and increasingly more households are headed by women. The combined effect of these two structural shifts has been a growing number of single working mothers in the South African workforce.

While it goes without saying that every single mom’s financial circumstances are uniquely different, single mothers face very similar challenges when it comes to their finances. Shouldering a heavy workload while raising children on their own, multi-tasking becomes a necessity, time is scarce, and finances are tight.

From our experience, however, single mothers have a special type of resilience and resourcefulness when it comes to managing their finances. Research shows that women make better investors because they are more likely to seek advice, stick to their financial plans, and remain composed in times of market volatility.

With these inherent advantages in mind, there are some concrete steps that single mothers can take to fortify their financial positions.

  1. Set Your Financial Objectives

It doesn’t make sense to start making major decisions regarding your finances if you haven’t taken the time to clarify what your long-term financial goals are. Everyone’s objectives will be different. If you’re a single mother caring for one or more children, it’s likely that your key financial priorities will relate to ensuring you can pay for your children’s education, put money aside for childcare when you’re at work, and build enough savings to be able to pay for their tertiary education.

  1. Create a budget and stick to it

Once you’re clear on your near and long-term financial goals, you need to figure out how to work towards achieving them. That means creating a budget to cater for your monthly expenses and ensuring that the income received covers all necessary expenses, while also allowing you the ability to save.  While budgeting for a single-income household may sound simpler, it’s also a lot more stressful – especially if you’re a mother shouldering all the costs of child-rearing without financial support from the other parent.  A budget is one of the most effective tools to ensure you direct your money toward achieving a set of pre-determined goals.

  1. Build an Emergency Fund

Life happens! An emergency fund is a great way to keep your emergency savings safe. Financial experts suggest keeping at least three months of expenses in this fund.  Single parent households face added financial pressure if they experience emergency expenses not planned for. There’s no second person to rely on, which means your access to credit can get maxed out quickly.  Having some money (no matter how small the amount) set aside that’s quickly and easily accessible will give you peace of mind that you can weather the storm when life happens.

  1. Invest for Retirement

You may be somewhat resistant to set aside money for later when there are so many current needs and expenses, but it’s important to at least start the saving process. At some stage, your children will be able to become financially independent, and if you’ve already got a (small) base to start with, you’ll be able to grow it more effectively.

  1. Estate Planning

However much you own, having a valid and updated will in place is essential. Not only will it make sure your final wishes are executed your way, but it’s also imperative for outlining who will take care of your dependents if you’re no longer around.  If you don’t have a Will and you haven’t nominated a guardian, the decision falls to the courts, which is a difficult process, and your dependents won’t be able to easily access the money they need.

  1. Trusted advice

Making decisions alone can be stressful, lonely and overwhelming – especially when it involves major financial decisions such as buying a property, cashing in an investment, or purchasing a new car. One of the best things you can do is to find yourself a trusted financial advisor – one who is completely independent, who is not financially incentivised to sell products, and who genuinely has your best interests at heart. Ideally, look for someone who is accessible, objective, and experienced – and who is willing to partner with you over the long term.

The financial life experience of a single mom is a testament to strength, resilience, and determination. While they face numerous financial challenges, single mothers can employ various strategies to secure their family’s financial future. Budgeting, seeking support, investing in education and career growth, saving for emergencies, and planning for the long term are all essential components of their financial journey. Single moms with the right mindset and support, can build a stable financial foundation for themselves and their children.

If you are a single parent, take the time to engage with an Activ8 advisor. We have qualified advisors who are single moms, who are on hand to help, support and assist you in creating a secure financial future for the overall well-being of you and your family.