Single parents face unique financial challenges while trying
simultaneously to raise their children and take care of their
own financial needs.
Whether you are or expect to become a single parent, here
are some of the financial issues and challenges to account
for:
- Budgeting
- Collecting child support
- Your saving for children's education
- Planning for your retirement
- Health, life, and disability insurance
Budgeting
Having a realistic and well-conceived budget will form a
foundation from which you can confront the financial pressures
of single parenthood.
With only one income, more demands are placed on a larger
portion of your income, so it is even more essential for a
single parent to pay close attention to how he or she spends money to make sure that the steps
to take care of immediate needs and long-term financial goals are met.
Learn more about money
management and how it is essential for cultivating financial
health.
Collecting Child Support
If you are a single parent because of divorce, chances are
that you are receiving child support payments. However, enforcement
of child support payments is often lax, and many fathers neglect
to pay.
If you are owed child support payments but do not receive
them, there are steps you can take to collect. Most states
have child support collection agencies that can track down
fathers and attempt to collect payment. Locate the collection
agency in your state.
Saving for Children's Education
Helping to pay for children's education can be particularly
challenging for a single parent. Once again, it's particularly
important to pay attention to how you save for this significant
expense.
One benefit that single parents have is that, because they
have lower household incomes, they are more likely to qualify
for higher amounts of financial aid. When you do save to pay
for an education, be sure to take advantage of investment
strategies whose value is not used to calculate the assets
on a financial aid form.
Learn more
about investment and savings strategies for saving for college
costs.
How much will college cost in the future? This tool
will help you estimate your costs.
Once you have a rough idea on how much tuition will cost in
the future, how much will you have to save in order to get
there? Use this tool to determine what you will have to save:
Planning for Your Retirement
Even if it is difficult to make ends meets, planning for
retirement is essential. If you have been through a divorce
settlement, you may have the right to part of your spouse's
retirement account in addition to your own, but it is unlikely
to be enough for your needs.
For extensive information on planning for your retirement,
visit our section on retirement
planning.
What retirement accounts or retirement income should you
plan on if you have been divorced? It is possible that your
divorce settlement included the right to a portion of your
former spouse's retirement benefits earned during the marriage.
To find out, your attorney will have to petition the court
for a QDRO (qualified domestic relations order), which explains
to the pension administrator of your ex-spouse's plan on how
to divide the benefits. Sometimes benefits are paid as a lump
sum, monthly when you retire, or are transferred to your own
IRA or other retirement vehicle.
As the law currently stands, if you were married for at least
ten years and haven't remarried, you can qualify for Social
Security benefits based on your ex-spouse's earnings if the
benefits based on your own earnings are less than half of
his or her benefits at age 65. This will not reduce his or her Social Security
payouts, so it should not be a source of contention.
Health, Life, and Disability Insurance
As a single parent, health, life, and disability insurance
are an even greater necessity. If you are the only financial
support for your children (and especially if your former spouse
can't afford to take care of the children), you need to plan
for the possibilities.
Visit MsMoney.com's insurance
area to learn more about these types of insurance and
how to evaluate them.
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