Financial Planning for Single Moms

Being a single mom can be overwhelming and it can be hard to handle everything that comes at you. Whether you are a single mom by choice, you’re divorced, or whether unfortunately your partner passed away – these are all very difficult, devastating situations. You can do it, but you do have to plan. Financial planning becomes even more important when you have to do it alone. Our expert, Paula Brancato, tells us how to get your plan on track so you can protect your family if something happens.

Insurance and Family Protection Needs

There are many considerations when you’re alone. It is even more important to do a will. For example, if something happens to you, you want a backstop for your children. It is critical to have enough life insurance. If you are lucky and you had a spouse or partner who had life insurance – and it’s not great that something happened to them, but at least you don’t have to upend your life.

Life insurance can help you get through the tough times and a million dollars of life insurance is not that expensive. Maybe five hundred dollars a year. And it should throw off $50,000 a year for your family to live on. And then can be used to pay for mortgage, can be used to pay for college or health or anything else that comes up. Oftentimes when somebody is going through a divorce, or a death in the family, it also becomes very hard for them to work. So even though you may be making significant amounts of money and you think “Oh I don’t need my spouse or partner to be insured,” actually you do. Because you are not going to be in a very good position emotionally when something like this happens. And it may take years to recover. You may only be able to work part-time. You may only be able to concentrate part-time.

Take care of any family protection needs, especially if you’re single. Also if you’re single, your income counts. So you want to make sure you have adequate disability coverage. You may have a group policy at the office – it is not going to be enough. Most group policies don’t pay. You want to make sure you have disability coverage. You want to make sure you have a will. Very important. You want to make sure you have a guardian. Very important. You also want to take the time to work with somebody, a planner who will help you design a budget, so that you can see…what is it I’m making…what income do I have coming in from all sources.

Divorced Parents and Alimony

If you’re a divorced parent there may be alimony. One mistake that a lot of women make is – they live off the alimony, and then it goes away. And they don’t understand how it is that they can’t have any money. If you can save that alimony, even part of that harmony, or put it towards a home…or put it towards some sort of investment…you’ll be much better off in 10 years than you are now. If you don’t feel that you can do that, sit down with a planner and figure out how much you can save for yourself. You need to take care of yourself.

It’s important to look at all of these aspects of planning, and all of the financial situation, and to get a handle on it. Because you’re single. Because you’re doing this alone. Find a planner who can work with you…who can shoulder some of the effort and the responsibility. Who can help you create a budget, who can keep you on track, who can remind you that, yes, there are 200 million things you have to do but right now, this year, only one thing a month to get your financial plan on track. One thing a month and they will help you do it. Whether it’s putting a $100 away for your retirement. $100 away for your college education, buying that insurance you’ve been putting off. Whatever it is that you need to do. And some of these things can be quite complicated – complex estate planning… to make sure that you’re moving the ball along so that within a year, or two, or three, you have a good handle on everything and you have good guidelines for the future. And everybody’s going to be happy and healthy…and you’ll have a terrific retirement, your kids will be fine and you don’t have to worry.

About Our Expert: Paula Brancato is a financial planner and investment advisor to new parents, growing families, business owners and family offices. Her strategic expertise derives from service as a CEO and CFO, as well as from her work with hundreds of families and businesses she has advised and helped. Paula has worked at several major banking and investment firms and she earned her M.B.A from the Harvard Business School. Reach out to Paula: (646) 813-9590 or pa************@ba******.com

For more: Family Finances – 6 Areas Of Planning