PERSONAL FINANCE THROUGH LIFE'S STAGES:

Single parents and money matters

Today's high cost of living presents challenges for most families, for the single parent there is an additional strain on an already stretched budget. Single parents face unique financial challenges in that they try to provide, simultaneously, for the family, take care of their own financial needs, and must ensure that, should anything happen to them, the children will be taken care of.

Budgeting takes on a new meaning where there is only one income to support a family. Set a realistic budget and try to stick to it as this will form the basis on which you can confront any financial pressures. Your priorities are likely to include your mortgage or rent, utility bills, food, clothing, childcare, vehicle expenses, insurance and savings. How much is going to each category, and is there any way you can cut back? Paying close attention to how you spend over a period of a month or two is good preparation for establishing a budget that will help you to plan systematically to meet your immediate needs and long term financial goals.

Establish a cash reserve

With no second income to fall back on, single parents could find themselves in a difficult situation in an emergency. Children fall ill, or there may be car or home repairs to worry about; it is impossible to predict such unexpected events so set aside about six months of expenses in a money market account in anticipation of this.

Find secure and affordable housing

One of your priorities should be to find a secure and affordable place to live. It can be tempting to try to maintain an expensive home that will relyon two incomes to sustain it. Of course there must be a balance between the need to live in a decent home in a safe environment versus having to put up with substandard housing. Be sure that you can afford to live where you choose to live; it is better to "downsize" in the short term, than to jeopardise the future financial security of your family.

Are you insured?

As a single parent, health, life, education and disability insurance are important. As morbid or pessimistic as it may sound, if you are the primary breadwinner with dependent children, it is your responsibility to try to ensure that there will be some financial cushion should you lose your job, become ill or in the event of your untimely death. A life insurance policy will help to replace and protect your income and can help to prevent your children from becoming totally dependent on the charity of relations or friends. It can also provide legal guardians with the resources to care for your children and to ensure that they have the opportunities you would have wished for them. An educational policy will also provide benefits for the payment of their school fees and other incidentals.

By putting in place the right type and amount of insurance you will have peace of mind in the knowledge that you are securing your children's financial future. A rough rule of thumb is to buy coverage of eight to ten times your salary. Seek advice from a reputable firm; an agent will help you to determine how much and what type of insurance coverage will best meet your particular needs and situation.

Invest for the future

As a single parent, it may be difficult to save for both your retirement and other goals and your children's education, but you cannot afford to prioritise only the financial future of your children and ignore your own retirement needs. By starting to plan and invest early, even a little amount put aside regularly over several years will accrue over time into a significant sum. The earlier you start saving for your retirement, the more you will have set aside to ensure a comfortable and secure retirement.

Write a will

An estate plan is more important than ever for a single parent. A will provides clear directions about who will inherit your personal property, bank accounts and investments and who will execute your affairs after your death. Carefully determine who would be capable and willing to assume responsibility for your children and that they understand the full implications including the significant financial responsibilities that accompany legal guardianship.

Verbal instructions carry little weight; if you die intestate, that is, without a written will, everything involving your estate and your children will be decided by a probate court and might not be in accordance with your wishes. You may also wish to consult with a lawyer about setting up a living will which expresses your wishes if you become terminally ill or incapacitated, and a durable power of attorney to empower someone you trust to carry out your express wishes.

Do not overindulge your children

As parents it is generally our desire to see our children content. For single parents there is often the additional pressure to do everything possible to keep children happy. With pressure from TV, radio, and other media commercials and competitive parents, it can be difficult to navigate the minefield of excessive buying and spending, particularly for your children. This can be very damaging to not only your finances but to theirs as well. Don't feel guilty about not providing all their "wants". When appropriate, have an honest discussion with them regarding the family's financial picture. As children get older encourage them to start to save and earn some of their own spending money.

Whilst single parenthood tends to feature high up on the list of life's major challenges, with careful planning and budgeting, one can emerge confident in ones ability to provide a comfortable and secure lifestyle for the family.