Effective Financial Tips
For Single Mothers

Motherhood brings joys and challenges in equal measures. While the joy of watching your child grow up amid innocent naughtiness is second to none, the responsibility of securing his/her future with proper education and values makes the job of a mother one of the toughest.

If you are a single mother, difficulty levels compound manifold as you need to fight pitched battles on multiple fronts including social apathy and a system that’s oblivious to the realities of a failed relationship. Financial insecurity is the biggest concern for single mothers, and this article lists ways through which they can deal with the situation.

Be financially literate

Life is uncertain, and a sticky situation can arise anytime. To avoid getting caught in such circumstances, you need to arm yourself with financial knowledge as much as possible before and after your marriage. Know what rights you have in your husband’s assets to keep difficulties at bay.

Take for example, the case of 40-year-old Deepali. After separating from her husband 10 years back, her biggest concern was her son’s education. Thankfully, Deepali’s habit of learning the nuances of personal finance from a young age came to her rescue.

She knew her rights over her ex-husband’s assets and the alimony she should receive. At the same time, she roped in the services of a financial planner to better assess her situation and plan the way ahead.

Avail child plan and health insurance

For single mothers, the biggest concern is their child’s education. With education inflation pegged higher than retail inflation, it’s imperative to build a vast reservoir of funds. It’s a little easy to build education corpus for your child when both the husband and wife are contributing to it. However, things are quite different for single mothers.

Therefore, it makes sense to avail a child plan to secure your child’s financial future. In child plans, the parent is the insured, while the child is the nominee. In case something were to happen to you, your child receives the sum assured. The investment component of a child plan generates returns for wealth accumulation.

Also, new-age child plans give you the flexibility to receive pay-outs as per the requirements to fund the higher education of your child.

Along with a child plan, cover yourself and your child with a health insurance plan. A dedicated health cover reduces out-of-pocket expenses and puts a tight lid on depletion of savings amid a health contingency. A health insurance plan ensures the money you have saved or have received as alimony doesn’t get wiped out due to a medical crisis.

Also, since you are the sole breadwinner, it’s critical to avail a term life insurance plan to safeguard your family’s interest. Even if you have received a large sum as insurance pay-out or alimony in the event of your husband’s death or divorce, it may not be adequate to take care of the family’s expenses. A term life insurance plan hedges your child against financial insecurities in the future.

Start investing to secure your retirement

Investments are necessary to compound wealth in the long run. While the burden of responsibilities double-up for single mothers, this shouldn’t refrain you from investments and securing your retirement.

You can start small by starting a systematic investment plan in an equity mutual fund. Most mutual funds allow you to start from as little as Rs. 500 per month, which you can increase later. An investment of Rs. 1000 per month in an equity mutual fund offering annualised returns of 12% per year for 20 years can help you accumulate a corpus close to Rs. 10 lakhs.

Parking money in a mix of market-linked and fixed return instruments can help you build a sizeable corpus for your retirement and ensure you don’t have to depend on your child to fund your retirement expenses. Also, it makes sense to make a Will to ensure smooth distribution of your assets in your absence.

The final word

As a single mother, you need to re-prioritise your needs and get back to the drawing board. You must take a fresh look at your goals and make the desired changes. While time will heal the emotional scars, it’s essential to get a grip over family’s finances and move ahead with life.

Empower yourself to be financially independent. Join the Blue Bindi Project today!

Source: Nuvamawealth.com