5 tips to reduce financial stress on single parentsNov 04, 2020
For single parents who are raising a family, running a household, working, and managing the finances, life can be hectic, to say the least. When single parents are doing it all on a low income with a heavy debt load, life isn’t just hectic, it can also be stressful and overwhelming. Taking steps to reduce debt can definitely reduce any financial stress you’re experiencing.
While single fathers are not immune to debt stress, a 2018 Statistics Canada report, The Economic Well-Being of Women in Canada, states that single mothers make up to $27,900 less than single fathers. And the average net worth of single mothers is less than half of single fathers.
Women are more vulnerable to low income than men, according to Stats Can, because:
- Women are paid less than men with similar qualifications, even when they work equal hours.
- Women are overrepresented in low-paying occupations.
- Women are more likely to take time away from their jobs to care for children and elderly or disabled family members.
1. Prioritize financial literacy
Why is a focus on financial literacy so important? The more you know, the better your ability to make informed money decisions. You’ll also have a better understanding of the short-term and long-term implications of those financial decisions.
Do a quick and honest self-assessment. Are you comfortable using a budget? Do you understand how credit card interest is calculated? Are you aware of all the debt solutions available to you? It’s about learning as much as possible about money and debt management so you can make the most of your income, especially if you are parent in a single income household.
2. Keep track of your expenses
We are increasingly becoming a cashless society. According to the Bank of Canada, while paying with cash is trending downward, the number of credit and debit transactions are on the rise. And as more of us choose credit or debit over cash, it’s easy to lose touch with how much is going towards needs vs wants. As a parent, teaching your kids to take a balanced approach to spending may be the single most important money lesson you can share. These three strategies can help you keep track of your expenses:
- Look for practical budgeting advice. A household budget doesn’t need to be complicated, and it can help you monitor your spending, pay off debt and create short and long-term financial goals.
- Online worksheets make it simpler to track expenses. Plug your numbers into a budget worksheet to create a workable monthly budget that is easily updated when your financial situation or goals change. A paycheque planner helps you coordinate your expenses, credit card payments, utility bills and more with your paycheque.
- Personal finance apps do some of the debt reduction work for you by tying directly into your bank accounts and credit cards so you can see where your money is being spent. Most apps can be customized to include your budget limits for groceries, bills and debt payments, and will provide warnings when you are approaching or exceeding those limits.
3. Take advantage of government help, tax benefits and credits
The COVID-19 financial crisis has touched millions of Canadian households. If you have been laid off, need to self-isolate or you’re unable to work because your child’s school or daycare is closed, government assistance is available for single parents.
It’s also a good idea to ensure that you’re receiving all additional government benefits for which you’re eligible, including Canada Child Benefit, GST/HST credit and provincial credits and benefits. Visit the Government of Canada website for a helpful overview of child and family benefits.
4. Familiarize yourself with your debt
It’s difficult to make real progress towards paying down your debt until you know the basics, like how much you owe and what you’re paying in monthly interest charges. Here are a few resources that can help you get to know your debt better:
- A will help you understand how your debt payments affect the interest you’ll pay and the time it will take to pay off that debt.
- Use this debt repayment options calculator to determine your monthly payments for different debt solutions, including paying the debt on your own vs a consolidation loan, credit counselling and a consumer proposal.
- Debt avalanche or debt snowball are two strategies that can help you reduce your debt load more effectively by choosing to focus on highest interest debts or smallest debts.
5. Talk to a financial professional
How do you know when it’s time to seek help from a financial professional? If you’re unsure what to do about your debt or you’ve reached the point where you can’t manage it on your own, you’ll benefit from meeting with a licensed professional. A Licensed Insolvency Trustee (LIT) will review your finances, advise you on available debt solutions and help you choose the option that works best for your situation, even if the solution is retooling your budget or applying for a debt consolidation loan. For single parents, who may feel like they’re facing debt alone, seeking the advice of a financial professional like an LIT can help reduce the financial stress.
Single parents living on a low-income face unique financial challenges. Carrying too much debt can make things much more difficult. If you’re a single parent living on a tight budget, start reducing your debt and your financial stress by arming yourself with a variety of useful resources and sound debt advice.
Are you experiencing any of these signs of financial trouble? A Licensed Insolvency Trustee will meet with you for no cost and no obligation.