Being a single person is a whole lot different from being a single parent. You can even say that they are at the extreme ends of the status range. They also have very different saving problems. When you are single, you only care about your own needs. But when you are a single parent, you have to take care of your child or children – alone.
There are money management tips for a single person but it is nothing like what a single parent needs. There are so many financial struggles that the latter requires and it is not something that you will take lightly. Raising a child is hard. Doing it alone is a different level entirely.
According to the WashingtonPost.com, single mothers in general are having it rough when it comes to their personal finances. In fact, one third of households that are headed by single women are living in poverty. 45% of children who live without a father are also in poverty.
The same article also mentioned that children who live in a poor home headed by a single mother are more than likely to stay in poverty. They have lesser chances for moving up the ladder in society. While this does not necessarily mean marriage can help sustain a more stable financial situation in a household, the financial struggles of single mothers evidently affect the future of their children.
This is probably why more and more single parents choose to save for college instead of contributing towards their retirement.
Single parents can only pay for college savings and not retirement
Saving problems arise when you have to choose between two important goals. But one can only assume what single parents are going through. They probably do not want their children to think twice about going to college because they know that it is the ticket to improve one’s financial situation. They want their kids to have a fighting chance to get proper education without immersing themselves in too much debt – which is the norm for college students coming out of poverty.
This assumption is supported by the results from a survey done by Allianz and published on their website, Allianzlife.com. The study was titled LoveFamilyMoney and it revealed that although children can be a cause of financial stress, they can also be a cause of motivation – especially for single parents.
Apparently, a lot of single parents are focusing on their children’s future rather than their own. That means they are more inclined to finance the college education of their children before their own retirement. The results of the survey reveals the following about the saving problems of single parents:
- 45% of respondents who are single parents admitted that they develop and execute long term financial plans so they can save up for their children’s education.
- 76% of single parent respondents find it stressful to save up for both retirement and their child’s college fund.
- The annual income of households headed by single parents (at least for the respondents in the survey) average at $85,000. 64% of these single parents do not receive child support.
- 41% of single parent respondents showed a certain level of expertise when it comes to making financial plans – which is more than the percentage in traditional families.
- 62% of single parents confess to being savers compared to 38% who are spenders.
- 76% of single parents reveal that they are worried about not having enough money in retirement. 70% of parents from traditional families feel the same way.
- 45% of single parents say they have a plan to ensure they will have a comfortable retirement.
- 37% of single parents know that they are putting their futures at risk by choosing to save for their kid’s college fund instead of their own retirement.
The saving problems of single parents are understandable because their limited financial resources does not allow them to work on multiple goals. However, it does not mean that it should be left that way. 45% of the single parent respondents believe it is the parent’s responsibility to assist in setting up their child’s financial future. While it is noble and something that parents would really do, it is also dangerous for them to put their future on the line.
There are many mistakes that will cost you a good retirement and choosing not to save up for them is on top of the list. The respondents of the survey who are single parents indicated that they knew the repercussions of not saving for their future but they can chosen to sacrifice themselves for their kids. However, there are still options that these parents should do to help set up both their future and that of their kids.
Tips to pay for both college and retirement savings
Admittedly, it will be tough to save up fro both college and retirement. This is one of the popular saving problems of all American households today. However, that difficulty does not mean it is impossible.
Here are some tips that we have for all the struggling single parents out there.
- Save a little for both. A small amount is still better than nothing. Any amount that your budget allows you to save can be split in two and sent towards your retirement and your child’s college fund. It is just like debt payments and savings. You will always be better off contributing to both. Do not choose one – make both of them grow. While the immediate need may be to save for college, because it will happen sooner than your retirement, it does not erase the importance of the latter.
- Involve your child. Since it is for their future, let your child or children contribute to their college fund. Encourage them to get part time jobs during the summer and save everything they make (or a huge portion of it). This will teach them financial responsibility and will make them appreciate the importance of earning money and saving it for future goals. If your kid is still too young, you can encourage them to save a portion of their allowance for college. This will help increase their college fund and keep you from feeling guilty about putting aside money for your own future.
- Apply for scholarships. According to Fastweb.com, there are certain scholarships that are intended of children of single parents. The benefactors understand that the financial responsibilities of single parents can be very demanding. Couple that with the need to balance work, school, caring for the kids, etc, then it all can be quite overwhelming. Look into these scholarships and see where you can get help. Encourage your child to study well so they can qualify for these scholarships and grants.
The saving problems of single parents are not really impossible to overcome. Even those who are earning a minimum wage and living in poverty are hopeless. But it is important that parents understand that they can share these financial responsibilities with their children. These kids may not get it in the same level as adults do but they can get used to the idea of being responsible for their own future. It is not really parenting cruelty if you have to enlist the help of your child when it comes to financial concerns. It will actually make them more independent and hard working. As long as you are able to support their schooling and encourage them to build a better future for themselves, then it will benefit them all the more.