Ways You Can Build Financial Security as a Single Parent

Financial security is more than just simply having savings.

Photo by Karolina Grabowska

(SALEM, Ore.) - Building financial security is hard enough, but throw a child into the equation, and you're about to face a very difficult challenge. At least, that's what you're probably thinking.

It's true that being financially secure takes time and effort. However, the process is nowhere near as difficult as people make it out to be.

The truth of the matter is that it can take a long time before you start seeing those extra zeros in your bank account. But financial security is more than just simply having savings. It's to ensure both you and your child's future.

In this post, we'll be providing a few tips to help single parents build up their financial security.

Come Up With Short-Term Goals to Accomplish

Short-term goals are what you accomplish within the span of a year. Below are a few short-term goals you can accomplish to better your financial situation:

• Finding balance within your budget
• Setting up an emergency fund
• Paying off a certain amount of debt in the span of a few months
• Putting your money toward a lucrative investment

There are many goals for you to strive for, but you need to prioritize the ones that coincide with your current financial situation.

Use Every Tax Deduction You Can Find

While everyone's situation is different, it's possible to spend over 10 and 20 percent of your monthly income on taxes alone. The average person spends around $17,000 on taxes every year, but this high cost isn't set in stone.

You can reduce how much you must pay when it's time to file. What's more is that being a single parent gives you a significant advantage during tax time. You can claim your children as dependents, which automatically knocks off hundreds off your bill.

In addition, you can potentially deduct up to $2,500 if you cosign on your children's student loans.

While this is certainly an opportunity you should heavily consider, there are a few things you should know first. To start, your credit is put at risk as well as your children's. If they don't pay off the debt in a timely manner, you'll not only be responsible for the payments, but your credit score can also take a hit.

Second, the loans could default with some lenders being very strict. If a loan defaults, you'll have to pay everything up front. Just if you set up auto pay, however, you won't have to worry too much about this. All you need to do is set up a proper budget and stick to it.

Apply for a Life Insurance Policy

Life insurance can cover the beneficiaries attached to it in the event of the policyholder's death. No parent or child wants to dwell about death, but there will come a time where you won't be around to take care of them.

A life insurance policy can ensure your child's well-being. Again, death isn't a wholesome subject, and even life insurance policies understand this. That's why all you need to do is choose the policy you want, which can be permanent or term, pay the premiums and leave it be.

Focus on Saving for Retirement

What you have in your bank account is all you must live on unless you have a lucrative source of passive income. Regardless, you need to create a retirement glide path and devote a certain amount of money to your retirement fund.

If you're a federal worker, chances are you have a 401k. Your employer will automatically contribute funds to this plan, which you'll be entitled to once it's time to finally retire. However, it's highly recommended that you contribute your own funds in a separate account, so you don't have to worry about going back into the workforce.

Source: Salem-News.com Special Features Dept.