Tips for families living on a single income
It is vital to get to a point where you are living with as little debt as possible.
The 21st century has seen a fundamental change in family dynamics.
Single-parent households have become commonplace while the nuclear family scenario is waning. Statistics released in 2018 revealed that of the 989 318 babies born in South Africa in 2017, 61,7 per cent had no information about the father on their birth certificates. Coupled with this is an entrenched societal fallacy that single mothers are destined to be entrenched in menial jobs. That said, Alfred Ramosedi, CEO from Bayport Financial Services has some sage advice for single parents.
Ignore these negative people. You can take control of your personal and financial well-being and become a success if you follow a few simple rules. The first port of call on the journey toward financial freedom, according to Ramosedi, is drawing up a budget.
“Very few people take the time to define a budget and, more importantly, follow it. The old adage, ‘to know where you are going, you need to know where you are’ is particularly relevant to this situation. Essentially, a budget will give you a snapshot of exactly where you are financially, allowing you to ensure basic family needs are met, keeping you out of debt, and showing how much disposable income is available for investments and sundry costs. The key here is to be as detailed as possible, listing even the smallest amounts, and to be honest with yourself. Those expensive meals and must-have accessories will come in time.”
Once the budget has been defined, and your financial situation has become clearer, it is time to address that ever-present elephant in the room – debt. Ramosedi added that according to recent surveys carried out by the World Bank, Statistics SA and the National Credit Regulator, consumers spend more than 72 per cent of their income on debt repayments.
“It is vital to get to a point where you are living with as little debt as possible. Essentially, it all boils down to pragmatism. Is your purchase a want or a need? You want the new model car, but only really need the far cheaper, three-year-old model to get to and from work. Remember: don’t try impressing anyone else but yourself. Put the credit card away and use it only for emergencies. There are numerous organisations and institutions that will guide you in the process of consolidating and conquering your mounting debt, and assist in lowering unmanageable interest rates and monthly instalments.”
Next on the agenda is to start saving money wherever feasible. This, as we know, is incredibly difficult when costs are continually going up and wages barely keep pace with inflation.
“Cutting down on frivolous expenses can save a lot of money in the long run. Branded clothing, fast food, and expensive entertainment are always nice to have, but not always needed. Once you have cut all the unnecessary expenditure, the best place to begin is with a simple emergency fund for those unforeseen expenses like car problems or faulty appliances. Open a separate savings account and funnel any spare cash into it. In fact, it is best to first deposit into this account before any other expenditure, this is an investment in you and your family. What is more important than that? The ultimate goal here is to build a buffer that will take care of expenses should you lose your job or should some other calamity befall you.”
An often neglected aspect of personal financial management is estate planning. You don’t have to be a millionaire with a stock portfolio to ensure your kids are well cared for, should you pass away. There are numerous brokers who will be able to cater to your policy needs, irrespective of your financial situation. This includes medical aid, death and disability coverage, and retirement annuities. You can always start small and, as you climb the ladder of success, increase your premiums to secure more cover. Additionally, it is vital that you draw up a will which will ensure your wishes will be carried out after you are gone and your kids are cared for properly. Many banks and financial institutions will do this for you for free, and it will guarantee that no one will be able to sabotage your children’s future.
Lastly, while it is evident that as a single parent, you are a strong, self-reliant individual, put your pride in your pocket and get sound, professional advice.
