Recovering financially as a single parent is a common problem after a divorce. Carrying all the weight of parenthood on your own can really be a burden.
I didn’t see all of these financial struggles coming until I realized that I was nearly bankrupt. So, I needed to immediately find a way to recover financially as a single dad. And I have found out that focusing on making more money, building emergency funds, getting a life / health insurance, living below your means and budgeting are really helpful for a financial recovery. Let’s talk about these in this blog.
I finally made a decision to focus on these things because it is a fast and proven way to recover financially. These solutions are what I came up to while having my son in custody. It may take time but you need to stick with this plan if you want to get back up quickly.
However, you may need to change your lifestyle drastically to save more money and spend less of it. This is not an easy job to be done but I assure you that it’s possible! With a few adjustments for you and your child, I hope you eventually recover soon.
How can you recover financially as a single parent?
Making More Money
The first thing you want to do is to focus on making more money. What I mean by this is increasing your income and adding another stream of income. You don’t want to depend your source of income in one income stream.
Let’s say you currently have a job, request for a raise. If you have done well in your workplace then there’s a big chance to get what you requested. The higher the raise he better.
You recently had a raise, now the next thing you do is ask for another raise! Kidding! I’m talking about starting a side business. The best way to do is start a side business or starting a blog.
There are many ways to make more money. But what I’ll show you is the general explanation.
These are the 7 types of income streams:
- Earned Income – Money that you earn by doing something. For example, your salary from your job.
- Profit – Money that you earn by selling something for more than it costs you to make.
- Interest – Money that you get as a result of lending your money to someone else to use.
- Dividend Income – Money that you get as a return on shares of a company you own. For example, income from investing in stock market.
- Rental Income – Money that you get as a result of renting out an asset that you have.
- Capital Gains – Money that you get as a result of increase in value of an asset that you own. For example, you bought your house for $100k and sold it for $110k. Your capital gain is $10k
- Royalties – Money you get as a result of letting someone use your products, ideas, or processes. For example, you recorded a song and a movie used it and whatever they pay you is a royalty income.
Building Emergency Funds
Emergency fund is your pool of money that you must use only in case of emergency. From what it’s called for emergencies only. Maybe an unexpected job loss, hospitalization, immediate car or home repairs, disasters or any emergencies that needs funding.
These requires at least six months of your monthly income that you put in a bank or somewhere safe that you can collect anytime.
Having this money lets you clear your mind from going back to being bankrupt. Emergency fund is a mandatory now because there’s a little kid that’s dependent on you.
So build this up as soon as possible. This will be your trump card in case of whatever is unexpected to happen.
Some say that you need to save 20% of your monthly income. Well that depends on how you can manage to make the pool fill up fast.
Life / Health Insurance
Life and health insurances also plays a big role in recovering financially. You should ensure that your child is covered by the insurance.
Unexpected sickness can drain up your emergency funds. So a health insurance would be your saviour in case that happens. Always check what type is best for you because insurance companies differ in policies.
Life insurance covers accidental death, disability and others. Like health insurance companies they also differ in policies, so choose what suits you best.
Living Below Your Means
Get ready to be frugal! cut out unnecessary expenses. If you have a high rent on your house, you should consider transferring to cheaper ones. Maybe you can walk to work? you can save on gas this way.
Stop dropping by that Starbucks store! Make your own coffee! And before buying new clothes, use old clothes. I know you’re not using half of what’s on your wardrobe.
Instead of hiring a babysitter, why not drop your kid at your parent’s house before going to work?
Living below your means helps you save money. You’re mature enough to not go with the latest trends.
Budgeting is a part of living below your means. Track your spendings, save on whatever you can save on.
Plan your budget before you go to grocery. You might need a planned meal for you and your child. Stop eating at fast foods, they’re not healthy. Learn to cook your own food.
This is a crucial part of your financial recovery so you need to give an hour or two to calculate and list down the budgeting plan.
Recovering financially is hard especially for single parents like you but it’s doable. You just need patience and consistency for you to be financially stable and provide for whatever your child’s necessity. Struggles do not last long if you put on the hard work and determination. Good luck on your journey!
If you’re a single parent, share us your story in the comment section.
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