A Financial Safety Net for Single Moms

by Barbara Marquand

Everyone needs a financial safety net, especially single moms. You’re likely very busy, but don’t neglect long-term financial planning. Take these steps to get started.

Many mothers are multitasking machines, tending to the dozens of jobs that must be done to keep the family happy and healthy. But between the homework help, the play dates, the cooking, the laundry and the bedtime stories, family finances are easy to overlook.

For single mothers, it can be especially difficult to find the time to devote to long-term financial planning, yet doing so is critical to ensuring the prosperity of your family. Here are five steps to get started.

1. Track income and spending.

Don’t let fear stop you from facing financial facts.

“Sometimes clients think, ‘If I don’t think about it, and I don’t look at it, everything will be OK,'” says Court Creeden, a MassMutual financial professional and founder of Parent Financial, a financial planning firm in Charlotte, N.C., that specializes in working with families.

But assessing your situation is the first step to alleviating financial anxiety.

Write down every expenditure for a month to see where money is going, and compare the total with income. Look for ways to trim the budget if there’s nothing left over for savings or essentials, such as insurance.

“Until you get a clear handle on how much you make and how much you’re spending, you’re not going to get anywhere,” Creeden says.

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2. Make sure you have adequate life insurance coverage.

Thirty-nine percent of single moms say if they died, their families would be in financial trouble immediately, and another thirty-three percent say their families would be able to get by for only several months, according to research by LIMRA.

“If, God forbid, something should happen to them, then without life insurance their children would be in jeopardy,” says Catherine Theroux, a spokesperson for LIMRA, a global research and consulting group that tracks the life insurance industry.

Don’t assume you are adequately protected just because you have life insurance through work. Typically, those policies are for small amounts. Evaluate how much your family would need if you died, and get life insurance quotes from highly rated insurers.

“In addition, make sure your ex is covered if you and the kids depend on child support or alimony,” Creeden says.

3. Protect yourself in case of disability.

Young women face a larger chance of disability because they face some risks men don’t, such as pregnancy-related conditions and uterine cancer. They also face a higher risk for breast cancer and melanoma, says Barry Lundquist, president of the Council for Disability Awareness. Illness (not injuries or accidents) accounts for the majority of long-term disability claims.

Read the fine print if you have disability coverage through work, Creeden says, and talk to a financial adviser to get additional coverage if necessary.

Typically, employer-sponsored disability benefits provide just 60 percent of your base income if you become disabled and can’t work. Bonuses and commissions are not counted as part of the base, and if the employer pays the premium, the income from the insurance coverage is taxable. That’s often not enough coverage for families.

4. Get health insurance if you’re uninsured.

One big medical emergency can lead to bankruptcy. If you and your ex lack employer-sponsored coverage, check to see if your kids qualify for free or low-cost health insurance coverage through the Children’s Health Insurance Program, a combined effort of the federal and state governments. If the children don’t qualify, shop for individual health insurance.

5. Build an emergency fund.

Creeden says that he recommends enough savings to sustain you for four to six months in case of job loss or other emergency, and up to a year if you’re in an industry with heavy layoffs.

Don’t wait until the end of the month to see how much is left over for saving. Decide on an amount, and transfer it to savings at the beginning of the month. (See How to Make ‘Pay Yourself First’ Work for You.)

No room in the budget for savings? Creeden says one client found money by cutting cable television. Painful? Sure, but is the Food Network or food on the table better?

Creeden says another way to squeeze money from a tight budget is to make sure you’re getting all the discounts you can from your current home and car insurance company, or to shop around for less-expensive coverage.

Reviewed May 2023

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