Finance

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Six  Gain financial wisdom.

You must gain financial wisdom. Without it, winning with your money will be virtually impossible. In Proverbs 4:7, Solomon shared, “The beginning of wisdom is this: get wisdom. Though it cost all you have, get understanding.” If Solomon, one of the wisest people who has ever lived, realized it was worth “all you have” to get wisdom, we should all take note! You could have more degrees than a thermometer and still be broke!

You must gain financial wisdom.

Recognizing that time is a valuable and precious commodity for you, here are some ways to gain financial wisdom without feeling like you need to complete days and weeks of college course. Read books about personal finances. Attend one or two day personal finance conferences taught by me or other financial teachers (like Dave Ramsey and Robert Kiyosaki). Take online on-demand personal finance courses (like the one I provide called the I Was Broke. Now I’m Not. Core Coaching Program).

PRACTICAL STEPS TO TAKE:

1. Read two financial books each year
2. Take one financial class each year
3. Meet with a financial coach once each year (see final section)

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Five  Establish automatic long-term investments – then monitor

In the midst of the busyness and chaos of being a single parent, retirement and college expenses are approaching – one day at a time. It is vitally important to prepare for them.

While investing can seem very intimidating and potentially overwhelming, it certainly doesn’t have to be! If you have a Retirement Savings Plan (RSP) available via your employer, begin with contributions to that account, particularly if a company matching contribution is available. The ultimate goal is to contribute at least 15% of your gross income (before tax pay) to your retirement account. If you can’t start there, begin with an amount that enables you to receive the entire employer matching contribution.

Retirement and college expenses are approaching – one day at a time.

As you receive pay raises, use half of the raise to increase your retirement contribution until you achieve the 15% level. For example, suppose you are contributing 3% of your pay to the company 401(k) in order to receive their matching contribution of 3%. You receive a pay raise of 3%. Immediately adjust your investment contribution from 3% to 4.5% (half of your raise). This way, you will still receive some of your raise in your paycheck while also securing your future retirement. It is important to fund your retirement account prior to your children’s college fund. Usually money only flows from parent to child – not child to parent!

As your financial situation improves, you can begin contributing to a 529 College Savings Plan for each of your children. One great approach is to establish a 529 College Savings Plan account for each child and ask their grandparents to reduce their Christmas/Birthday/Special Day spending on “stuff” by half and send the other half to each child’s college account! Grandparents love it, and we all know that children like the boxes their toys come in better than the toys themselves!

PRACTICAL STEPS TO TAKE:

1. Ensure you are contributing enough to your employer’s retirement savings plan to receive the full matching employer contribution
2. As you receive raises, use half to increase your retirement investments until they reach 15%
3. Establish a 529 College Savings Plan for each of your children
4. Invite your children’s grandparents to contribute to the accounts as part of their gifts to the children on their special days – Christmas, Birthday, other Special Days

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Four  Establish financial margin

Nothing will create financial pain and agony like having no savings. Without financial margin, you will always be on the brink of financial disaster. If you are a single parent with no money in savings, you clearly understand that even simple expenses like replacing a car tire can wreak havoc not only on your finances, but also on your emotional well-being.

You can not PROSPER if you do not SAVE.

It doesn’t have to be this way! As outlined in I Was Broke. Now I’m Not. [Click HERE to get your copy], the first step to establishing financial margin is Rung #2 of the I Was Broke. Now I’m Not. Ladder – Saving an amount equal to one month of your expenses. For most single parents, this is between $2,000 and $4,000. Your number will vary based upon your geographic location and cost of living. If you have this amount in savings already, you know how very important it is to your financial and emotional stability! If you do not have this amount saved, take clear note of this fact: You can not prosper if you do not save. It is simply impossible.

This is yet another reason why it is so important to prepare a monthly budget. You will not stumble your way to saving money. It happens on purpose through the use of a good budget. It allows you to be intentional about saving money and establishing financial margin. Ultimately, you want to grow your savings to an amount equal to three months of expenses (Rung #5 of the I Was Broke. Now I’m Not. Ladder).

PRACTICAL STEPS TO TAKE:

1. Determine your savings goal (One month of expenses for you is: $______ )
2. Save your entire tax refund
3. Eliminate a regular expense or bill that is a “want” (like Cable, Starbucks coffee (gasp!), or gym membership) and save that money until you’ve achieved Rung #2 of the IWBNIN Ladder.

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Three  Move to equal payments where possible.

As a single parent, surprises are unwelcome, especially financial ones! Seek to eliminate these sorts of issues by moving to “equal payment plans.” Many utility companies offer these options that basically even out your annual costs into equal monthly payments. This means your electricity costs will be the same all twelve months of the year. The same is true for natural gas, fuel oil, water, and other utilities.

You can do the same with many of your known, upcoming non-monthly expenses like annual insurance premiums, homeowner’s association fees, and membership dues. Convert to a monthly payment system to prevent the dreaded “budget crushing” expense. Essentially you want to convert your KNOWN but non-monthly expenses (like Christmas, car repairs, etc.) into “every paycheck” expenses. Instead of attempting to pay for $500 of Christmas presents out of your December paychecks, you save money from each and every paycheck throughout the year for Christmas. It is much easier to save $20.83 per paycheck (when paid twice a month) than it is to save $500 in one or two paychecks, right?

PRACTICAL STEPS TO TAKE:

1. Call each utility and known, upcoming, non-monthly expense and establish an equal monthly payment plan.
2. Use the Known Upcoming Non-Monthly Expenses Calculator to establish savings for these expenses every paycheck.

Welcome to the latest series here at the wildly popular JosephSangl.com – “Managing Money As A Single Parent”!

Part Two  Eliminate as much work as possible!

Your time is extremely valuable. As a single parent who must run kids to practice, go grocery shopping, ferry kids back and forth from school, and, oh yeah, work, you realize more than most people that there are only 1,440 minutes in a given day. To ensure you have enough time for the most important things in life, seek to eliminate as much work as possible when it comes to managing your money.

To ensure you have enough time for the most important things in life, seek to eliminate as much work as possible when it comes to managing your money.

One key way to do this is to automate every bill you possibly can. For individuals or businesses who can’t accept automatic online bill payments, establish automatic checks. This is a free option from nearly every major bank.

For impulsive spending categories like food (grocery and restaurants), clothing, entertainment and spending money, use cash envelopes. Once you are paid, withdraw cash for the budgeted amount you’ve allocated to each of these categories. Put the money into an envelope and only use the money for these impulsive expenses. Once the money is gone, don’t spend money in that category until you are paid again. Employing these principles not only reduces the time you have to focus on money, but it also makes budgeting much simpler.

PRACTICAL STEPS TO TAKE:

1. Establish automatic bill payments for your monthly bills as much as possible
2. Implement the Cash Envelope System (see my short YouTube video explaining this in more detail)