As a single parent, you may be solely responsible for the financial well-being of your family. Sometimes, this can feel overwhelming or like a heavy weight to bare.
The COVID-19 pandemic exacerbated existing issues – single parents were disproportionately affected by unemployment in previous years as well as during the pandemic – and created new ones, such as trying to find a balance between remote work and school.1
Having a plan to address financial issues will give you an increased sense of control and help you identify steps to take. Below are a few steppingstones to consider while forging your path to better financial security for your family.
Simple finance tips for single parents
1. Create a budget
The first step when creating a budget is to write down sources of monthly income. This can include:
- Paycheck(s) from a full- or part-time job.
- Income from side hustles (e.g. do you coach a sport or do hair on the weekends?).
Once you have your monthly income figured out, it’s time to calculate any reoccurring expenses such as housing, transportation, insurance, etc… These are all known as non-discretionary expenses.
Things you want but don’t necessarily need are considered discretionary expenses. Think streaming services, gym memberships, and daily coffee runs. If you need to cut back on spending, see if there are any luxuries you can live without, even if it’s temporary.
If you’re unsure how to organize a budget, check if your financial institution has an online budgeting tool you can use. This will make it easier to monitor spending habits and see if you are on track to meeting goals.
Tip: Want more help navigating family finances on your own? Watch our free, on-demand webinar, Finances for Single Parents.
2. Take advantage of tax credits
The American Rescue Plan Act of 2021 includes improvements to the child tax credit for 2021. Parents may receive $3,000 per qualifying child or $3,600 per qualifying child under the age of 6.
3. Lower the cost of childcare
The average single parent household in 2020 spent 34% of their household income on childcare.1 If it takes up a large portion of your budget, too, you may be interested in ways to remedy this.
First, ask your employer if there are any benefits you can utilize, such as a dependent care flexible spending account (FSA). FSAs allow you to use pretax money for childcare expenses.
You can also see if anyone in your personal network would be willing to babysit while you’re at work. Whether it’s your mom, dad, or a trusted friend, even helping one day a week can go a long way.
4. Save, save, save!
Whether you’re saving to build an emergency fund or to finance a purchase like a new car or your child’s education, there are easy ways to get the most out of your efforts.
Some financial institutions offer round up programs which will round up your purchase to the nearest dollar and deposit the change into a bank account of your choice. This way, you can put your savings on auto pilot and let spare change contribute to goals.
You can also make sure a set percentage of your paycheck is going to a savings account by setting up automatic transfers or on payday. By knowing how much you save per month you’ll have a better idea of how much you can accumulate and how soon.
5. Evaluate your bank accounts
You probably think of banks as just a place to put your money, right? It’s time to shift your thinking!
The financial institution you build a relationship with should offer products and services with your best interest in mind. This translates to checking account options with special perks, like the ability to earn dividends or rewards.
If your money is just sitting in an account, consider switching banks to get a more attractive checking account option.
- Tip: Learn more about how joining a credit union means access to lower fees and higher savings interest rates.
6. Address lingering debt
Paying off credit card debt can make you feel like a hamster running on a wheel. Stop the cycle by putting a number on your debt.
Take the total balance of all your credit cards and loans so you can see the big picture of what you owe both in the short and long term.
If you have multiple credit cards with a balance on them, consider consolidating them onto one credit card. Doing so allows you to take advantage of a potentially lower rate. Plus, you won’t have to keep track of multiple credit card payments.
At General Electric Credit Union (GECU) we celebrate the amazing job single parents do every day. We strive to make your banking experience convenient, simple, and stress-free so you have more time to focus on you and your family.
Interested in becoming a GECU member? You’re eligible if you live, work, or worship in Cincinnati.2 We look forward to being a part of your family’s financial journey!