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Single mom’s guide to investing

Financially speaking, "a single mom has a two-fold problem: providing for the daily financial needs of the household and their future needs as well." (Getty Images)

13 investing tips for single moms.

No one can juggle plates like a single mom. From getting the kids to school without cereal stuck in their hair to making it to work on time without cereal stuck in yours, life as a single mom is a constant juggling act. Financially speaking, “a single mom has a two-fold problem: providing for the daily financial needs of the household and their future needs as well,” says Mark Charnet, founder and CEO of American Prosperity Group in Pompton Plains, New Jersey. “These tasks can seem monumental, especially with only one income earner in the family.” So let’s make this easy: Here are 13 investing tips for single moms.

But first: Build a budget and emergency fund.

Before you can start investing you need to make sure you have a solid foundation under your financial feet. This means establishing a budget and emergency fund of three to six months’ expenses, says Jennifer Dempsey Fox, president of Bryn Mawr Trust Wealth Management in Berwyn, Pennsylvania. These elements may sound basic, but when you’re the sole support financially, having a plan for today and one for just-in-case is important. Without either, your investments are more likely to be at risk of needing to be sold early for funds.

Next: Protect your loved ones with life insurance.

Part of your financial footing and protecting what’s yours is making sure you have appropriate life insurance. As your family’s sole supporter, making sure they’re taken care of if (heaven forbid) something should happen to you is important. “A simple rule of thumb is 10 times mom’s annual income,” Charnet says.

Now: Start investing as early as possible.

This one’s for all the investors out there, not just single moms: The best thing you can do for your investments is to start funding them yesterday. “Longer term savings will compound over time,” says Traci Mabrey, head of wealth solutions at Broadridge Financial Solutions. Starting to invest early is especially important for single mothers, who often find themselves at odds with the clock trying to get everything done. Let time work for you, not against you by investing early and consistently.

Invest to your strengths.

Single moms have one thing many investors don’t: the ability to plan and plan well. “The successful single moms I’m friends with and work with are by definition planners,” Fox says. They have to plan their week, their kids schedules and all the logistics that go into both. Utilize that skill when starting to invest by building a plan for yourself and your investments. How much do you want to invest to begin with? How often will you add to your investments? How can you make sure you increase your contributions over time?

Define and prioritize your financial goals.

As your investment plan starts to take shape, make sure you have clarity around your financial goals and priorities. Goals-based investing has shown to be a successful, long-term investing strategy and one that single moms will likely be adept at. To use it successfully, you need to know what you’re investing for and how long you have to reach that goal. The challenge will likely be less defining your goals and more prioritizing them.

Prioritize retirement savings before college savings.

No mom, single or otherwise, wants to be a burden to her children. The inclination for most single moms is to put their kids’ needs ahead of their own. But this can backfire when you reach retirement unprepared after years of putting others first financially. As a single mom, covering costs in retirement will likely come down to you, yourself and your kids. Any retirement shortfalls on your end will likely become your kids’ responsibility. Don’t delay saving for retirement until your youngest has flown the nest, Fox says. “You can always borrow for college; you can’t borrow for retirement.”

Take advantage of free money.

Few appreciate financial support more than a single mom. When every dollar you earn needs to stretch over multiple mouths, the more dollars you can get, the better. Don’t leave free money on the table: If your employer offers a 401(k) match, max that out first and foremost. 401(k)s are also great ways to start investing because they often have fewer investment options (read: fewer decisions to be made on top of what to make for dinner) and a hotline you can call for free advice. “If you’re self-employed, make sure you’re taking advantage of all the other retirement vehicles available to you,” Fox says.

Take advantage of free tools.

Another benefit of 401(k) plans is their tools. “A lot of them will provide risk tolerance questions” to help you determine your target asset allocation, Fox says. Then they can help you identify funds that will fit your desired asset allocation. Your 401(k) can also be a launching point for investing outside of your company retirement plan: If and when they start investing outside of their 401(k), some folks will just mimic or mirror their 401(k) allocation, Fox says.

Plan for long-term health care.

Saving for retirement means more than just having enough to cover your living expenses; there’s also the hungry beast in the room that is health care. People’s life expectancies are growing every day and women already statistically live longer than men. It’s essential for single moms to have adequate health care coverage, Mabrey says. Add lines to your financial goals for the cost of health care in your retirement. Your family history can help you forecast future health care expenses.

Use 529 plans.

Once you’ve saved for retirement, you can turn an eye toward your kids’ education. “Consider contributing to a 529 plan for the kids early or let relatives know that you would appreciate gifts to a 529 plan for the kids,” says Cathy Curtis, a certified financial planner and founder of Curtis Financial Planning in Oakland, California. 529 plans are tax-advantaged investment accounts that let you save for primary or secondary private school tuition or college. “There is not a tax deduction for contributions, but the money grows tax-deferred and if used for qualified education expenses, there is no tax on withdrawals,” Curtis says, making them powerful savings strategies for single moms.

Automate investing to take it off your recurring to-do list.

Whether you’re investing in a company-sponsored plan or on your own, the best thing a single mom can do is automate investing. When “no one has time for that” is the catch-phrase of your life, automating chores is the holy grail. “Start a systematic investment program directly from mom’s checkbook into a series of mutual funds geared toward long-term growth,” Charnet says. Aim for weekly or monthly contributions. As your income increases, so, too, should your contributions. The same holds true for your kids: “When a child receives a cash gift for birthdays or holidays, it should be added to his or her allocated fund balance,” Charnet says.

Save yourself time by getting guidance on your terms.

Speaking of time management, investing is one area where you have full permission to make it work on your schedule. “Time is probably the biggest enemy of a single mom,” Fox says. Being able to find resources that can communicate with you when and how you want is essential, she says. Whether that’s a human advisor who doesn’t mind Skype meetings, a robo advisor with 24/7 chat support or a firm that provides free online tools so you can research yourself in your spare time, look for guidance that can be there when you want it and not the other way around.

Be confident.

Finally, go forth with confidence. “It’s all confidence in investing,” Fox says. For single moms there’s often “moments of doubt just because kids will do that to you.” But investing needn’t feel that way. “Be confident,” Fox says. “You’ve got this.” And if you don’t, there’s a whole industry of people, robots and resources here to help.

The single mom’s guide to investing.

— Build a budget and emergency fund.

— Protect your loved ones with life insurance.

— Start investing as early as possible.

— Invest to your strengths.

— Define and prioritize your financial goals.

— Prioritize retirement savings before college savings.

— Take advantage of “free money.”

— Take advantage of free tools.

— Plan for long-term health care.

— Use 529 plans.

— Automate investing to take it off your recurring to-do list.

— Save yourself time by getting guidance on your terms.

— Be confident.

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The Single Mom’s Guide to Investing originally appeared on usnews.com