As a single mom, you don many hats. Taking care of the house, handling the job or the business, supporting the kid(s). All of that, almost without no support from someone else.
There are very few personal financial crises that can be predicted. The sudden loss of a job could not have been foreseen. Not many people saw the economic crisis of 2008 coming, but millions of them were affected by it.
Some money problems can, however, be seen coming from a mile away. Taking out loans and creating a huge debt load for yourself seldom ends well. Using credit cards as if they are a license to go on shopping sprees will only end in disaster.
It’s normal to have a few minor financial hiccups while you’re a young adult. They are part of your learning curve as you enter the real world. Things change when you are a single mother, but there’s also nothing to be ashamed of if you run into difficulties later on either. It’s not about how you got into them that counts. What matters is how you get out of them.
Behaviours to keep your finances looking healthy
Do not go into unnecessary debt
It’s impossible to avoid debt totally, especially if you want to buy a house or a car. When it comes to other purchases, think twice before you apply for finance.
Your parents and grandparents have probably told you that if you can’t afford to pay cash, you need to save up until you can. This is very true. If you delay your gratification for a short while to save up for something, you’re likely to appreciate it more.
Live within your means
You should have a budget each month. Work out how much money you have to spend each month after you’ve paid all your debts. Then list what you need to spend money on and how much you plan to spend. Stick to your budget unless there is a major emergency. Include some savings in your budget.
The nature of financial difficulties
Your financial issues are not going to be the same as the next person. So, their solutions aren’t necessarily going to work for you. While it’s a good idea to get advice from people who’ve been in similar circumstances, remember that your solution will be unique to your situation.
Look at some of these scenarios and potential solutions:
- You might be unemployed and needing to service debts while you’re looking for a job. If you show that you’re actively seeking work, you could qualify for a short-term emergency loan for the unemployed from a financial institution.
- If something has come up and you need money before your salary is paid, you can apply for a 3-month payday loan. These loans can tide you over in an emergency.
- You might have a lot of different debts like credit cards, store accounts, and other loans. You could apply to have all your debts consolidated. It involves taking out a loan, paying off all your other debts, and paying off that loan in monthly instalments. Paying off such a loan might cost you less in terms of interest than keeping your existing debt.
How to avoid getting into debt
- Avoid the mentality of buying now and paying later. The idea of debt being abstract makes it easy to enter into until it falls due. That’s when it becomes very concrete and real.
- Focus on saving for the things you want to buy. Don’t tell yourself you’ll use the money you would have saved to pay off the credit card. You could end up spending that money on something else if you’re not disciplined with your finances.
- Look at your debt patterns. Are you inclined to get into debt over the holidays? Instead, set money aside each month so that you have additional funds available in December.
The downside of loans
- You have to pay interest on a loan.
- Interest is not the only expense you’ll occur. There are loan fees that form part of the transaction. Don’t only question what the instalment will be when you’re taking out a loan. Ask about any other fees. The fees will differ from one loan to another. For example, payday loan fees vary from personal loan fees.
Your response to financial challenges
- Keep your chin up at all times. You’re not the first single mother to experience financial difficulties, and you won’t be the last.
- It’s natural to get stressed out and depressed when money becomes a problem. You might want to wallow in some self-pity when you realise the extent of your difficulties. That’s a natural response. The important thing is not to stay in that state for too long. Getting beyond your troubles is your responsibility and yours alone. If you’re worried about how you got into trouble, you’re not focusing on how to get out of it.
- Get support from your family members and friends. Don’t rely on them to bail you out of your problems. They might not have money to offer, but a shoulder to lean on is important at this stage.
- Prioritise getting out of your current situation. You might need to move or take in a lodger to cover your debt. Your spending patterns will have to change so that you don’t buy things you don’t need. Embrace your reduced budget as a challenge that you need to overcome. There are many ways to spend less money on clothes, food, and groceries. All you need to do is think creatively.
- Learn from this experience so that you never unwittingly put yourself in the same situation again.