How Single Parents Can Save Money for A Child’s Future & Retirement

How Single Parents Can Save for Their Child’s Future and Their RetirementWith a single income, many single parents can find it challenging to do the money balancing act – saving for their retirement and providing for their children’s education. 

Single parents constantly battle the economic realities and emotions:

Should they prioritize their children’s future… or their retirement?

Or how they can accomplish both?

Walking on this tightrope can be confusing and stressful for parents who are single.

That being said, single parents can navigate this financial dilemma of protecting their future as well as their child’s with the help of these five steps. 

5 Steps For Single Parents To Save Money for A Child’s Future and Retirement

1. Plan in Advance

Big money goals – be it saving for retirement or your child’s college – can be accomplished if you plan in advance. Start saving early or as soon as your child arrives. Open a child savings plan that offers tax benefits and diverse investment options and start contributing to it. Planning in advance also helps you to avoid taking on debt in the future. 

2. Max Out Your 401(k) 

Many employers match their employees’ 401(k) and 403(b) contributions. This is essentially free money, and you should use it to your advantage by maxing out your 401(k). Moreover, the tax savings associated with these plans can help you fund your child’s college savings account. 

3. Consider Roth IRAs as Valuable Tools for Saving 

self-directed Roth IRA can be an excellent tool to help you save for both your retirement and your child’s college. The money you contribute towards your Roth IRA can be used for qualified educational expenses tax-free. For example, if you have contributed $25,000 into a Roth over seven years, you could use up to $25,000 for education expenses and leave the earnings in the account to help with your retirement. 

4. Create an Emergency Fund 

Single parents must be prepared for any life-altering event. One of the ways to make sure your children are financially taken care of in case of emergencies is to have an emergency fund of at least six months’ worth of your living expense. This seems like a lot of money, but you don’t have to do it all at once. Start small and build on it month over month.

5. Watch Out for Scholarships

Work with your child to figure out relevant scholarships that they can apply for. There are quite a few organizations that understand the financial hardships of a single parent and offer specific scholarships designed for single-parent children.

As a single parent, you have twice the responsibility of giving your child the finest education, experiences, and opportunities. But don’t do it at the cost of your financial freedom. Having a financial roadmap and following the above tips can help secure your retirement and your child’s future as well. 

single parents saving moneyAuthor Bio:

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly writes for his own blog of Self Directed Retirement Plans and as a guest blogger to many sites in the niche of finance. If you need help and guidance with traditional or alternative investments visit him at www.sdretirementplans.com.

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