As a single mom, you think very carefully about your families finances. You serve as the last line of defense and divvy up “single mom money” – one paycheck and maybe some child support into full lives for the whole family. We honor you, you incredible lady! I’m the (proud) daughter of a single mom.
In addition to being the backstop, you’re also responsible for the plan. Not just for next week or next year, but to financially set your kids up for success – and protect them from potential disaster. AskFlossie wants to give you some love. This article will give you a quick set of ideas and solutions to financially protect your children (and other dependents) through smart financial planning.
- The most important steps you can take are to keep updated account beneficiaries and to name a legal guardian.
- Insurance coverage is as important as savings for single mom families, where there is one income.
- When choosing life insurance, choose Term life. Universal or whole life is only appropriate for extremely wealthy people who need a tax shelter.
Insurance Coverage for single moms
First things first, make sure the ‘of course’ bases are already covered. Mainly, insurance coverage, which for single moms means Health Insurance, and ESPECIALLY life insurance, disability insurance and long term care. Its a great idea to build a grid in Google Sheets or even on paper with all your insurance coverage – your policy numbers, what company they are with, whether the payments are current, and what they cover. Sadly, when insurance is MOST important for your kids, you won’t be able to communicate the details.
If you want to be extra, building the grid is a great time to clean house. I just did this and discovered holes in our coverage, and even a duplicate policy the agent had written incorrectly. Yikes! Its also a great time to renegotiate. If you’ve held coverage for a while, you might have a better idea of what you need and/or be eligible for more discounts. Give them a call. When I cleaned up, I saved us several hundred dollars annually, just by asking. Pick a day when you can be on the phone a lot.
Check your account Beneficiaries
Most of us let our retirement accounts run on ‘autopilot’. They build up until you retire, no problem – right? Not exactly. If you pass away, the “designated beneficiary” on your accounts will automatically get the proceeds, regardless of what your will says. This is great, because its instant and doesnt go through probate. On the other hand, you better make sure its not your ex and that it goes to either your kids, or whatever guardian you have designated for your kids. Most banks and brokerages allow you to do this online. It’s a great chore for boring conference calls.
Draft and File a Current Will
Always have a will on file, and keep it current. If you die without a will, your estate will fall into government probate, a lengthy and annoying process that ties up your assets while the legal system figures out what to do with them. It can also complicate custody issues. If your ex is NOT in the picture, you don’t want full custody transferring to them on your demise, or you’re not legally married to your partner, a will is CRITICAL. It allows you to indicate to the courts who gets your kids, so there is no back and forth.
A will also lets you name your executor (someone reliable, nearby, and who loves your kids). You want to refresh it when you have a major life event (kids, marriage, divorce, major financial changes). There may be a legal aid team in your area to help you set it up. “Filing” a will means getting it notarized and leaving copies with the people who will need them (your executor, namely).
Build a Credit Score for Teens
You can set your kids up to have a positive credit score the day they turn 18 with a parent-monitored account. Get your teen a limited-balance credit card in their name (supervised by you – legally required). Help them make smart spending decisions and guide them through paying the card with allowance or job earnings. With a well-managed card in their name, your kids will turn 18 and quickly build a positive credit score. Plus, they get all the valuable money-management learning.
File Additional Legal Guardians
Consider guardianship if you fall ill or are otherwise unable to take care of your kids. Who would you prefer takes custody? In most states, you can file additional legal guardians with the court to identify who can and should be given custody if you are unavailable. This is a great way to identify a favorite family member, a trusted godparent, or a step-parent as the person who should make legal decisions and care for your kids if there’s ever a question.
Mama, you got this! We are SO proud of you.
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