As a single parent, you do not have the benefit of a second income to rely on to help cover expenses and save for the future. You have to make smarter financial decisions than two-parent homes to ensure that your family is ahead and prepared for the future. To help keep your financial future on the right track, here are some tips you can start applying now.
Project Your Future Earnings
If you are receiving alimony or child support payments, you should always operate under the belief that those payments could stop or be reduced at any time. Unfortunately, it is a very real possibility that could blindside you if you fail to plan for it now.
It is because of this you need to project your future earnings. To get a better grasp of your potential financial situation, do not add in the alimony or child support payments. Only focus on what you are bringing into your home.
Once you know how much cash flow you have without the payments, you need to compare it to your expenses and whether or not you can afford your lifestyle alone. If not, it is time to look for other income sources or changes you can make to your lifestyle to ensure that you can stay afloat if you lose the payments.
Get Disability Insurance
In a two-parent home, if one parent becomes disabled, the family still has the income of the other parent to rely on to pay bills. You do not have that luxury. If you are injured and unable to work, your family's financial situation could quickly deteriorate.
You need disability insurance. A good policy can provide you a percentage of your income over a period of time while you are unable to work. You can opt for a short-term or long-term policy.
To save money, you can opt for the short-term plan. If the disability lasts longer than a year, you can apply for disability benefits through the Social Security Administration.
You also need to try to purchase a plan now. The premiums are usually based on your age. If you get one now, instead of waiting, you could lock in a fixed rate that is far less than what you would pay years from now.
There are many other planning steps you need to take to ensure that your family is financially sound. Work with a financial advisor to identify those steps and take action to implement them. For more advice, consider contacting a professional like those at Family Financial Partners.