Raising kids on a single income can be tough as a single mom, regardless of whether you receive financial support. Managing your household's financial responsibilities as the primary decision-maker requires discipline, often through a process of trial and error. It can be especially challenging to navigate building your career while developing strong financial habits that create stability for your family. Which is why financial planning is key, no matter how much you currently earn, to comfortably raise your kids on a single income. It’s more than just managing money. It's about intentionally defining what financial freedom means to you and your family and from there, working backwards to establish a baseline and a financial plan that not only maximizes your income, but also identifies ways to earn more. Let’s explore how financial planning can make your money work harder for you as a single mom.
Get Clear About Where You Are
It’s time to honestly assess your relationship with money, you’ll need a clear picture of where you stand financially to develop a realistic financial plan. To start, review your bank statements from the beginning of the year to current, track your spending habits, and identify what’s coming in and going out each month. Here’s a few questions to ask yourself: Are you spending wisely, or are impulse buys adding up? Do you have multiple streams of income? Are you operating from an abundance or scarcity mindset? Remember, the purpose of this assessment is gaining financial clarity. Understanding where you stand financially is the first, crucial step in crafting a plan that’s not hopeful but actionable and aligned with your real-world situation and aspirations.
Debt Management is Key
Debt isn’t the devil! However, strong debt management is non-negotiable for maximizing your income across your family’s expenses. High-interest debt, like credit card balances, can slow financial progress. But maintaining low utilization or paying your credit card off in full each month can work wonders for your credit score. If you have a lot of debt, use strategies like the debt snowball (paying off smallest debts first) or the debt avalanche (targeting highest interest rates first) to focus on paying down debt. You can also try methods like balance transfers for a lower percentage APR (watch out for fees), consolidating debt, or negotiating interest rates with creditors. Strong debt management can be the difference of hundreds or even thousands of dollars that can be reallocated or deposited into your savings.
Get SMART About Your Goals
Although single moms are the most resourceful human beings on the planet (yup, we said it), there’s always room for improvement. It’s time to get SMART about your goals. Financial planning is about defining your short-term and long-term financial goals and turning those goals into realistic targets. For example, short-term goals like taking your kids on summer vacation, building an emergency fund, or paying off credit card debt. And long-term goals like setting up a custodial account for your kids, saving for a down payment on a house, and planning for retirement. Ladies, the SMART method has entered the chat: Specific, Measurable, Achievable, Relevant, and Time-bound goals. Why is this important? By defining your goals in detail, measuring your progress, and making adjustments, you’ll stress less and spend more time taking action on your goals because they’re realistic and aligned with your capacity as a single mom. These goals aren’t just for you, involving your kids in goal setting is a great family practice. You’re essentially laying the groundwork for the whole family to succeed, and we want to see you succeed.
Budgeting is Everything
Budgeting isn’t just about throwing numbers into a spreadsheet, it’s a consistent practice, a habit. In single motherhood, we know that life changes on a dime, whether we’re prepared or not. Having an iron-clad budget can mean you’re better equipped for unexpected life changes. Whether it’s increases in childcare costs, reductions or increases in income, or an opportunity for your kids that’s too good to pass up, a budget can help you move things around quickly, forecast a timeline for future expenses, and overall put your mind at ease in managing the household. Be sure to develop a budget that aligns with your SMART goals and aspirations. Allocate funds for essential expenses like mortgage/rent, utilities, food, auto, and childcare, as well as for debt repayment, savings, and for leisure because you’ve gotta live too! The key is regularly reviewing (at minimum monthly) and adjusting your budget to meet your family’s changing needs and goals. Your budget is the glue that maintains a strong financial plan that remains realistic over time.
Passive Income Isn’t Optional
It’s never been easier to make passive income, and believe us, you have the time! Raising kids on one income, having passive or multiple streams of income protects you against the uncertainty of today’s job market. Yes, an upfront investment of time is required and can be challenging to figure out as you assess which opportunities make sense for you. In single motherhood, where time is as valuable as money, these low-touch income streams allow you to earn more without the constant trade-off of time for earnings. The tools and opportunities to earn more are endless, it’s about working smarter, not harder. As we mentioned in other sections, there may be a period of trial and error, but leveraging technology to create assets like digital courses, online shops, or micro-influencing can rake in passive income. Think about the things you’re passionate about and genuinely enjoy doing, that’s where you should start creating passive income. In addition to earning more, passive income allows you to explore your passions beyond your 9-5 and can boost well-being and personal fulfillment. When you’re a happier human raising kids, it makes a huge difference, which is why passive income isn’t optional, and its impact goes beyond just the money.
Don’t Plan Alone
Although finances are personal to most, the more comfortable we become talking about finances, the more opportunity we have to build wealth. A common mistake we make as single moms is feeling we have to handle things on our own. The 'single' in single mom is a relationship status, nothing more. You can’t and shouldn’t handle everything on your own. Whether you hire help like a financial advisor or form an accountability group of moms who keep you focused on your goals, don’t plan alone. Engaging in a community with like-minded moms aiming for similar financial goals or a network that offers diverse perspectives can transform your relationship with money. Money isn’t everything, but financial planning is crucial when it comes to raising kids. If you haven’t already, start talking about your financial health and goals with someone you trust to help take you from where you are to where you want to be.
Financial planning while raising kids on one income doesn’t have to be stressful. Mindset is everything. It can be dynamic and exciting to build the life you envision for your family, but it’s an ongoing process that requires intention and adjustment as your life and goals change. We believe you can set a strong financial foundation for your family, and we have big plans to help you achieve it. Stay tuned.
How did we do? Did we miss anything? Are you ready to level up your financial future? What’s one short- or long-term financial goal you want to achieve this year? Let us know in the comments.
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