If you’re a single parent, you’re definitely not alone: according to statistics, over 13 million people in the United States are single parents. Statistics also show that raising a child from birth to adulthood costs approximately $226,920, and this amount can be financially straining for just one person. However, these financial challenges can be conquered with careful planning and budgeting.
The first step in preparing your budget is to sit down and make a list of all your variable costs, fixed costs, and one-time yearly costs. Then take these amounts and compare them to your projected salary.
Variable costs include:
Fixed costs, which are usually set and cannot be adjusted, include:
- Rent or mortgage payments
- Utility bills, such as cable, electricity, television, and Internet
- Insurance payments, such as health and auto insurance
One-time yearly costs include:
- Property taxes
- Registration renewals
- Holiday expenses
Newly-single parents also need to factor in other costs, such as transportation for their child, childcare, expenses related to maintaining a home, education, and so on. Alimony and child support payments might be additional revenue sources that help with taking care of some of these new and unanticipated expenditures.
Future planning for your child
Since it will take some time to become accustomed to being a single parent, it’s usually a good idea to create an emergency fund, which usually includes enough readily available cash to take care of six to nine months of expenditures. You can also plan for your child’s college education by saving now.
Special tax items
There are various tax deductions and credits that are available for parents with children whose salary falls under a certain income bracket. Tax credits are usually worth more than a deduction, because a credit will counterbalance your tax bill dollar-for-dollar, while a deduction will help reduce your taxable revenue. Tax credits include the Child Tax Credit and the Child and Dependent Care Tax credit. Additionally, child support payments are not classified as “taxable revenue” to the recipient.
If your expenditures outweigh your available cash flow, then you may have to contemplate going back to your job (if you are not currently working) or beginning a new career. If qualifications are holding you back from pursuing another line of work, explore the many grants and scholarships that have been specifically designed to assist single mothers.
Update and evaluate your financials
Life-altering situations, such as marriage, divorce, childbirth, and the death of a loved one all call for an evaluation of your financial situation. This includes looking over any wills, estate plans, life insurance policies, and so on.
Be a frugal shopper
Being thrifty and taking advantage of deals and sales are great ways to save money and lessen the burden of being a single parent. Check garage sales, snap up online bargain items, use coupons, and find other ways to save on items that you would normally pay retail for. Remember, a penny saved is a penny earned.
If money is tight and you need cash now, Peachtree Financial Solutions can help if you’re the recipient of an annuity payment stream. Peachtree Financial Solutions can provide you with a lump sum of cash. If a smaller lump sum will suffice, we can also purchase just a portion of your future payments for cash. Contact Peachtree Financial Solutions today for more information about how selling your annuity payments can help get you the cash you need.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.