10 Tips for Building Wealth as a Single Mom
A lot of moms wonder whether they can actually pay off debt, save, and build wealth at the same time and I am here to tell you that you can. One might have a bit more attention than the other and that’s okay. Here are some practical tips to help you do so:
Protect your money source which is you. If something happens to you, what will happen to your child(ren)? Purchase life insurance ( suggested amount: 10x your salary) so that if something happens to you and you pass away prematurely, your children are taken care of. Consult a financial advisor, planner, or coach to help you determine whether temporary or permanent is best for you. They will most likely recommend that you purchase a policy outside of your job. By the way, you don’t have to have a certain amount. I’m not sure who told us that or had us believing it to be true.
Purchase disability insurance so that if you are unable to work for any reason, your income is replaced. Accidents happen all the time.
You should have a plan for your money and know where every coin is going. You may not like the term budget so call it something else if you need to. I like the zero-based budget method. Find what works for you.
Have a plan to manage your debts. You don’t have to be debt free before you start investing but you want to make sure you have a plan to decrease your debts.
Begin contributing to an emergency fund if you haven’t already. You should start with a goal of $1000 or your first month of expenses and ultimately get to 3-6 months worth (that’s my goal).
You should save while you pay off debt. If you are solely focused on paying off debt, what happens when there’s an emergency and you need cash? You won’t have it and you will end up back in debt. You can also create a rainy fund when those little things happen that you didn’t budget for so you don’t have to take away that amount from your emergency fund.
Contribute to your retirement account (401K/403b, etc.) at your job. Most employers will match a certain percentage. Consider contributing the minimum amount that they will match. Example: If your company offers a 4% match, contribute 4%. If you can’t afford 4%, contribute 2% and start from there. You should be prioritizing your retirement before investing for your kids.
Begin estate planning which will include your will. This ensures that someone is able to take charge if something happens to you and tells them how your assets will be distributed. The will allows you to assign guardianship.
Surround yourself with like minded individuals that are on a journey to pay off debt, save, and build wealth. You can go so much further with a community of people that support you and help hold you accountable.
Get in the business of checking your financial accounts, no matter what the balances are. I am talking about checking and savings, credit card accounts… You get where I am going with this. Some people do Money Mondays or Finance Fridays where they check theirs. This helps you keep track of your finances - so you actually know how much is in your accounts, avoid fraud, and see if you’re being charged any hidden fees. Plus, seeing real numbers should actually motivate you to do better.
Bonus: Give yourself tons of grace. This journey is not an easy one, but it is possible. Say this aloud: I deserve to be wealthy.
What are you doing now or plan to start doing to build wealth??