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Raising kids alone is tough. Between long hours on the job and maintaining order in your home, you spend every waking moment—and every spare dollar—taking care of your family.
So, when it comes to retirement, you may have accepted that it simply can’t be done. That’s not okay!
Here’s the good news: Building wealth as a single parent can be done. All it takes is a little planning and a lot of determination. First the basics…
1. Reassess the Budget
Whether you create a traditional budget on paper or use an online budgeting tool, a budget is an absolute necessity—and even more so on a single income.
Raising kids isn’t cheap. According to the USDA, you will spend around $233,610 to raise a child to the age of 17.(1) And that’s just for the basics: food, clothing, housing, health care, education and transportation.
With all that money going out the door, you may not realize how much you’re spending. To keep yourself on track for retirement, give every dollar a name every month. Create a zero-based budget (where income minus outgo equals zero) and tell your money exactly where to go. Then, you won’t wonder where it all went at the end of the month.
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2. Make Sure You Stay Out of Debt
The first step on your journey toward retirement is to get rid of debt; it’s financial quicksand. Paying off debt is tough work for everyone—not just single parents. But working your way toward financial peace becomes much easier when you break it into steps.
First, put $1,000 in an emergency fund so you aren’t tempted to rely on credit cards when the alternator goes out in your car or your kids need new shoes because they’ve outgrown the ones they have.
Next, pay off all non-mortgage debt to free up your number one wealth-building tool: your income.
Then, stockpile three to six months of expenses in your emergency fund so you can handle whatever life throws your way. Because, as a single parent, life can throw a lot at you.
Finally, invest 15% of your household income into tax-advantaged retirement accounts like a Roth IRA and/or a Roth 401(k). Connect with a financial pro to outline a plan to work toward your goals.
3. Cut Spending
As the one in charge of your household, you may feel pressure to do everything perfectly when it comes to your kids. And if things don’t go quite right, it’s easy for guilt to set in—which can lead to emotional spending. Whether it’s charging a new outfit you can’t afford or investing in your kids’ college while ignoring your retirement planning, emotional spending can undermine your best financial intentions.
Don’t let your emotions tell you how to spend your money. Remember your needs: food, shelter, clothing, transportation and utilities. Everything else is a want. Who cares if you can’t buy your kids smartphones, laptops, cars and name-brand clothes? They’ll live! Don’t guilt yourself into believing you need to buy things to make them happy. You don’t.
4. Consider Changing Careers
I know this sounds drastic, but if you have trouble finding money for retirement in your budget, it’s time to take a good, hard look at your income. Let’s say you make $30,000 a year. How can you double (or triple) your income in 10 years? You might have to change careers or hit the school books again—which might not be easy. But it sure beats punching the time clock when you’re 80 years old!
Does the idea of fitting school into your busy schedule seem impossible? Consider going online. You can find great deals for online courses at brick-and-mortar colleges. Whatever you do, don’t rely on student loans to pay your way. Apply for as many grants and scholarships as you can to cover tuition without taking on debt. As a single parent going back to school, you’ve got a good shot at both grants and scholarships.
5. Save More With a Second Job
When I say "second job" I don’t mean bussing tables until midnight or making lattes in the wee hours of the morning. I want you to spend as much time with your kids as you can. There are plenty of ways to make some extra cash without sacrificing a lot of time: pet sitting (which your kids could love), delivering packages, taking surveys online, or tutoring. Just be intense, intentional and go all in!
6. Downsize or Share Your Home
Do you have a lot of unused space in your home? One way to free up more income for retirement is to move into a smaller home. Not only would you reduce your monthly mortgage payments, but you’d also cut your utility bill.
Another option is to share your home. Some homes have mother-in-law suites, and others even have two master bedrooms. You could charge rent for the room, share common spaces like the living room and kitchen, and split the costs of utilities and upkeep. You might even choose to share food costs. Two people paying the bills are better than one.
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7. Discuss Retirement Plans With Your Kids
Don’t leave your kids asking: Why is my parent so cheap? Make sure they know how important retirement is for you. When they see you working hard and succeeding, they’ll know they can do the same thing later on.
Even when they come down with a case of the "gimmes" (give me this, give me that), use the circumstance to talk about the importance of saving for the future. Put the situation into terms they’ll understand. Explain that when you’re focused on reaching a goal, like saving for a big purchase—or, in your case, retirement—sometimes you have to give up other things (like a new toy, video game or computer). That’s called opportunity cost. And they need to understand that concept before they start handling their own money!
If your kids can understand that stuff should never derail their commitment to completing a long-term goal, they’ll be way ahead of most adults when it comes to retirement investing—or saving for college.
8. Encourage Your Kids to Save for College
You’re not a bad parent for prioritizing your retirement over their college. If you don’t have the money to pay for Junior’s college when the time comes, the sky won’t fall. Junior can get scholarships, take AP classes, and save money instead of spending it.
Additionally, your kids can get jobs while studying in college. And no, despite the rumors, working through college doesn’t automatically lower a student’s GPA. In fact, students who work a moderate number of hours (15–20) often have higher GPAs than those who don’t work at all.(2) And, when your kid graduates, they’ll have work experience on their resumé. Win-win!
9. Make Sure Emergencies Are Covered
As I’ve already mentioned, a fully-funded emergency fund is a must. And saving for retirement doesn’t mean cutting out life insurance. Life insurance will protect your kids if something happens to you. It covers loss of income, funeral expenses and other financial needs that might come up if you pass away. I recommend purchasing a term life insurance policy for about 10 times your income.
10. Don’t Lose Hope
Wherever you are in your journey as a single parent, just remember that today’s struggles won’t last forever. Your story is going to keep moving every day. Make sure it’s headed in a positive direction. You are in control of your finances. You can make the decision to make tomorrow’s outlook better. You determine the kind of legacy you want to leave your kids.
Surround Yourself With Support
One of the best things you can do for yourself as a single parent is to surround yourself with community. It doesn’t matter if it’s extended family, neighbors, or your small group at church. The point is, don’t go it alone. There will be days you need a little extra encouragement or accountability—and maybe even a babysitter.
Be sure your support network includes a top-notch financial advisor to help you stay on track when life puts your nest egg at risk. A true investing pro will look at where you are today and guide you toward a future you can feel good about.
If you have retirement questions and don’t know where to start, talk with an investing professional who can help you lay out a plan so you can retire on your terms.
About Chris Hogan
Chris Hogan is the #1 national best-selling author of Retire Inspired: It’s Not an Age; It’s a Financial Number and host of the Retire Inspired Podcast. A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Hogan helps people across the country develop successful strategies to manage their money in both their personal lives and businesses. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.