Single mothers have to face multiple challenges, both on the financial and social front. Whether it’s a divorce or untimely death of a spouse; it becomes difficult to manage different situations. You have to be brave, wise, and strong enough to secure your life against all odds.
On the financial front, you should be aware of various aspects that need immediate attention. You have to plan your investments, and expenditures, for the present as well as the future. Not only this, you have to bear the responsibility of your children for their optimum well-being.
Prioritize your Needs
The foremost priority for a single mother is meeting everyday expenses. After a recent split or demise, you have to re-plan all your investments and expenditures as soon as possible. If you are an employed or self-sustained individual, you have to adjust the expenses according to your earnings.
And if you are a housewife, you have to arrange for the finances. A need may arise to take loans. In this situation, consider availing loans from your relatives instead from the bank. If you have accrued savings, you can invest a part of it in monthly investment plans (MIP). This may help in generating some monthly income.
Liabilities, Nominations, and Tax Implications
Liabilities may include credit cards or loans such as a home loan or car loan. If you have a joint credit card, you should block it immediately. In case you are listed as a borrower in the loan statement, you should immediately submit an application to remove your name so that you are not liable if your former spouse defaults.
Nominations that generally mentioned in bank accounts, public provident funds, and employer provident funds should be changed. Apart from this, in case your will depicts the name of your former spouse, consider revising it.
If you have received alimony after a divorce, it may be liable for income tax deductions if your former husband pays it periodically, such as monthly. But if it is a lump sum amount, it could be regarded as a capital receipt which could be non-taxable.So you should consult your tax advisor accordingly.
Life and Medical Insurance Covers
To avoid any hefty expenditure in case of any medical condition, it is wise to buy medical insurance cover for yourself and children. For example, a medical cover of 3-3.5 lakhs can be availed at a premium of Rs 4-7,000 per annum.
Life insurance covers are beneficial for the dependent individuals, for example, your children and parents. The insurer may either pay a lump sum amount in case of an unfortunate demise or pay the amount after the maturity period. Single mothers are recommended to avail these policies for a safe and secure future.
Child Education Plans
Higher education costs are on a consistent and some times the expense grows at a rapid pace. If you want your child to pursue a professional course in the future, you should start investing in systematic investment plans (SIP) to accumulate required amount for the education expenses.
You can also invest in child education insurance plans but the yield may be relatively less than that of mutual funds. If you are worried about the risks associated with mutual funds then one can opt for balanced funds or debt funds that have relatively lower to moderate risks viz a viz equity mutual funds.
As a single mother, unavoidable expenses can be a concern but your future demands stability as well. To avoid any cash crunch during your retirement age, you should draft investment strategies to fortify your financial stature.
You can invest your money in public provident fund (PPF) that could meet your future needs, and it could be better tax wise also. For more lucrative gains, start a long-term SIP to garner wealth for your future and for the same you should take help of your financial advisor.
Instead of focusing on the stigmas of the society, adopt a constructive approach to achieve financial stability. You should aim at maintaining an optimum living standard in the present and the future. Proper financial planning and investment strategies can assist you in fulfilling your dreams.
It is important that you get involved in your finance from day one along with your partner or spouse. Keep all the paper and documents ready so that in case of eventuality you dont have to run around. Always keep in touch with qualified tax advisor and investment advisor (certified) who can keep guiding you from time to time.
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