Building financial security as a single parent

 

Of all the things that single parents wish to do for their children, creating a financially secure future tops the list. The task may seem difficult and daunting, but it is possible with prudent planning and execution. Here are a few steps to help you build financial security for your child.  

Buying life insurance

Life insurance protects your family in your absence. As a single parent, having a life cover becomes even more important for you because your child’s security is at stake. You can opt for a pure-term life insurance policy such as HDFC Life Click 2 Protect Super. It offers three plan options to choose from, which are Life, Life Plus and Life Goal, each offering multiple flexible features. For example, you can opt to receive death benefits in instalments. Aligning the payout dates with your child’s milestones can ensure that they have the means to keep proceeding toward their goals even in your absence.

You can also choose a savings-based insurance policy such as the HDFC Life Sanchay Plus. It allows you to choose from different plan options such as the Long-Term Income Option and the Guaranteed Maturity Option. The former offers income for a fixed term of 25 or 30 years and returns the premium at the end of the term. The latter, on the other hand, offers a guaranteed lumpsum maturity benefit at the end of the tenure. Regardless of the plan, life insurance must be an integral part of the financial plan of single parents.

Starting to save early

The Jamaican proverb, “Save money and money will save you” holds in every sense. To start saving regularly, draw up a monthly budget. With a clear overview of your wants and needs, you will be better able to cut down on your expenses and allocate more to savings. Along with saving for your known future expenses, it is essential to reserve money for emergencies. An emergency fund can make up for your inability to support your family during financially tough times.

Invest to multiply savings

Where you start saving and investing is as important as when you start saving. The purchasing power of your savings at home may reduce over time due to rising prices. To beat inflation, you must find investment avenues that will help your money grow. Insurance products like Unit Linked Insurance Plans (ULIPs) not only offer a life cover but also allow you to enjoy market-linked returns since they invest a part of your premium in a mix of equity and debt securities.

Prioritising debt repayments

You may feel the need to resort to a loan or credit at times to manage your child’s growing needs. But borrowing can be a double-edged sword. While it may have your back in times of need, missing Equated Monthly Instalments (EMIs), defaulting on repayments, etc. can you push deeper into debt. Thus, it is important to craft a robust repayment plan. By saving and investing regularly, you may be able to repay your debts faster. Additionally, you can adopt debt repayment strategies such as the snowball method or debt consolidation according to what suits your situation the best.

Planning your retirement

Being a single parent is manageable financially when you have a regular flow of income. However, the absence of a continuous income stream may make things difficult. Therefore, you must give due importance to retirement planning. And it is never too early to start. The earlier you start, the more you can accumulate, and the more comfortable life you can have with your child.  

Making your child financially smart

As a single parent, you are solely responsible for your child’s well-being. However, over-providing or over-protecting may make them too dependent on you. Instead, strike a balance and aim to make them financially savvy so that they can manage their finances themselves when needed.

To sum it up

The financially secure life you envision for your child can be a reality if you make wise financial moves well in time.

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ARN: ED/10/23/5352