Single Parent- Not a tough job if your finances are right!

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Being a single parent in today’s society is quite a tough experience, not only emotionally but also financially. There are a lot of men & women who are single parents for various reasons ranging from demise of spouse to divorce, separation, etc. It is difficult today to raise a child with rising inflation & education expenses shooting up and with one being the only bread earner. If one is a single parent it is very important to provide a good standard of living for their children. We at Fpguru.com in support of a single parent will share a few financial guidelines to keep in mind for a better future for you & your children.

 

Insurance

Since the child/children are financially dependent on their parent, it is very important to have a life insurance cover. Incase of any unfortunate demise of the parent the child is atleast financially secured, also it is very important that he or she should not have any liabilities as it will only financially burden the child. Thus a term life insurance (pure death benefit) is a must for every single parent, cover depending on their need analysis. The parent being the sole bread-earner, apart from life insurance even health insurance is vital for both parent & child, thus if either requires medical assistance there isn’t any sudden monetary burden on the parent. An optimum cover for mediclaim can be around 3-5 lacs for both and one should also consider having a critical illness policy for self.

 

Financial Guardian &  Will

When one decides to be a single parent, one should see to it that the child is completely secured with or without her presence. It is very important for the parent to appoint a financial guardian for the children till they are minors incase she is unsure about her life or not being around her child. A financial guardian can be any one who is reliable like parents, siblings or a friend especially financially. She can also open a trust for the benefit of her child’s  future. A will is must for a single parent, mentioning about the trust, financial guardian and other important details so that her children do not face any inconvenience incase of any unfortunate event. This will make sure that her child is taken care of and secured.


Child’s Goals

Raising a child is not an easy task. Though emotionally it’s a joyful event one should not forget about the rising expenses from diapers to education to marriage and for a single parent it just gets difficult. Thus she should start planning for her child’s future goals early. Every parent should start regular investments/savings for her child especially for education and marriage. Since one can earn more in the initial phase of their carrier SIPs are must. Since these are long term goals investments can be in direct equity or equity oriented mutual funds. An adequate amount of contingency fund (atleast one year expense) is important incase of sudden loss of income.


Retirement

Apart from your child’s future and security, a parent should not forget her own retirement which is equally important. If one wants to live the same standard of living and not be dependent on their child one should start planning their retirement now. To have a healthy retirement corpus one should start investing early and can save till retirement. Also if one has any debts they should be cleared before retirement, so there is no burden during the retirement stage. This way one is not dependent on his or her child.


Planning to remarry

It is difficult to live a lonely life & it is always wise to have a life partner. A single parent may re-marry, however they should not forget about their own goals and their children. One should always continue savings and investment for self and children. However good the new partner is, it is necessary that all of her and  her child’s investments & savings should be in her own name. This will not lead to any future confusion for her children.



These suggestions are a must for the finances of a single parent. This will not only keep the parent financially stress- free but also help him or her give a better future to one’s children without being dependent on anyone.

 

By Namrata Shah.

The writer is working with FpGuru.com as a Financial planner.


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