The financial world has not always been kind to women, and it can be incredibly challenging for single moms, widows, and divorcees. Your household’s finances weigh entirely on your shoulders, never mind that you also have a household to run and a life to maintain. Maintaining your daily life comes with a constant wave of responsibilities, and often, your finances get lost in the sea.
But your finances are so much more than just paying the bills. It’s about creating a future that you’re excited about and working toward goals that fuel your fire. In this blog, we’ll discuss the importance of managing your finances and actionable steps that single moms, widows, and divorcees can take to control their financial future.
Understanding Your Financial Situation
First things first, you need to assess your current financial status. You can’t move forward if you don’t know where you’re starting from!
You’ll need to gather information on your retirement accounts, savings accounts, debts, estate plans, investments, and insurance plans. You can start setting financial goals when you know your total income, expenses, assets, and liabilities. Financial goals vary significantly from person to person, but here are some ideas to get you started:
Fund your child's education
Retire by age 60
Buy your first home
Pay off credit card debt
Think about your values and what inspires you every day. You should have various short- and long-term goals that are measurable and realistic. Sure, retiring by 45 would be amazing, but it’s just not practical for many people. Sticking with a financial plan is difficult when your goals aren't attainable.
Once you clearly understand your financial situation, it’s time to create a budget. Most people hear the word budget and run as fast as they can, but hear us out.
Adjust your perspective and take a more positive approach towards budgeting. It doesn’t have to hold you back; instead, think of it as the tool that gives you the freedom to do more with your money. It’s easy to get started:
Calculate your net income (which you’ve already done!)
Track all of your spending and expenses
Set goals such as paying down debt or starting an emergency fund
Make a plan that fits your needs and goals
Review your budget regularly (and adjust when needed)
Financial Planning for Single Moms
Single mothers face staggeringly high rates of financial insecurity. Raising a family on two incomes, let alone one, can be challenging.
Take a look at your total income. Aside from your full-time job, do you need to find additional sources of income? Consider considering part-time jobs, freelancing, or looking into passive forms of income. Choose a side gig that best fits your lifestyle and skills.
Single mothers must take every possible precaution and start building an emergency fund. You never know what the future holds, and an emergency fund can help ensure your and your family’s health and safety in times of need. Ideally, an emergency fund should hold 3-6 months of total living expenses, so in case you lose your job or have a health crisis, you can still keep the household running.
Even if you’re on a tight budget, it’s time to start investing. When you invest, you lay the foundation for your financial future. Think of your retirement plan, children’s education, or long-term financial goals—investing can help bring your dreams to life. If you’re unsure where to start, connect with a financial planner you trust. They will be able to assess your goals and risk tolerance and find investments that suit your needs.
Financial Planning for Widows
The emotional loss of losing a spouse can be crippling, and when you’re stuck navigating finances alone, it can be overwhelming. You’ll likely have a lot of questions. Will your income tax bracket change? How can you adjust to a single income? Will your Social Security be affected?
First, take care of immediate financial needs, such as life insurance, funeral costs, monthly bills, and other urgent expenses. During this time, don’t make any major decisions like selling your home, quitting your job, or making irreparable decisions with your retirement accounts or Social Security benefits. Take a moment to breathe and reassess with a financial professional when ready.
Evaluate what you need in the short-term and the long-term. You’ll need to adjust to a single income, which may mean you must reconsider your budget and expenses. For the long-term, if you don’t have an estate plan together, now is the time. Your estate plan ensures that your assets are taken care of and your legacy will remain as you intended.
Financial Planning for Divorcees
Divorce can be messy both emotionally and financially. If you’re going through a divorce, you must determine the division of your assets and liabilities. There are several things to consider:
Your primary residence: Do you want to stay in your current home or sell it? If you want to stay in your current home, consider the potential costs and financial burden.
Spousal payments: Also known as alimony, occur when one spouse makes substantially less than the other.
Child support: If minor children will be primarily cared for by one spouse, the other spouse will likely need to contribute child support payments. Health insurance costs will also need to be taken care of.
As a divorcee, you’ll also need to rebuild your financial independence. Your credit, investments, and financial plan depend solely on you. From now on, you get to call the shots on your financial future, and how exciting is that!
Seek Advice From A Trusted Financial Advisor
Navigating the financial world as a single mom, widow, or divorcee can be demanding, but it doesn’t have to be impossible. Work with an advisor you trust that prioritizes financial education and values investing to build wealth. Our team at Emergent Wealth Advisors simplifies the financial planning process so you can focus on what matters most to you. Learn more about our philosophy and get in touch with our team today.