Single mothers in South Africa can experience big financial challenges. According to research done by the South African Institute of Race Relations, only 35% of children were living with both their biological parents in 2008, while some 40% were living with their mother only. The government increased the child social grants to R290 in April, but this can only stretch a single mother’s budget so far. We look at ways to help the single mother juggle her finances and turn every cent around.
The basic expenses you should budget for
Having a budget will help you plan better. Paul Roelofse, consumer advocate at the Financial Planning Institute of Southern Africa, says it’s essential to put pen to paper and categorize your expenses for provisions and debt.
“Provision covers a broad range of expenses you should put aside for life insurance, short-term insurance and retirement. This is the money you’ll need for life-changing events or an emergency,” says Roelofse.
Getting rid of debt is another key element to future wealth, because debt’s interest alone will serve a better purpose if you can invest it. This is especially true for single mothers, who are likely to require the freed-up cash available after settling debt.
Suzanne Stevens, Executive Director at BrightRock, adds that a budget will help you stay clear of debt because you’ll be able to see upfront what money you have available once your expenses have been paid.
What should single mothers consider saving for?
An emergency fund is a saving facility that can provide peace of mind to any mother concerned about the money required for unforeseen circumstances.
“Putting away your money in a money market or access bond will give you peace of mind to pay for big expenses, like when your car breaks down or your geyser needs replacement,” says Roelofse.
Single parents should also opt for short-term savings such as unit trusts, as opposed to long-term savings like a retirement fund. This is because you are more likely to require access to your money before the age of 65 years if you are bearing the cost of raising a child.
Before looking into a savings option, it may be wise to speak to a financial adviser who can assist you in finding a portfolio that works for both you and your children’s needs.
“In the end, it’s all about getting your money to work harder for you, getting a little extra time to spend with your children, and sneaking in some ‘you time’,” says Stevens.
How should you budget for your children’s education?
Education is a necessary and often expensive requirement. This financial responsibility can become even more overwhelming for a single-income household.
“All parents want the best education for their children, but realistically not everybody can afford it. Many people fall into debt traps trying to pay for their children’s tuition. Even university is not as expensive as some private schools,” says Roelofse.
When it comes to paying for university costs, Roelofse says you don’t need a big capital as it can be paid off each semester as a living expense. For example, if your child wants to live on the campus’s residence, consider how much you can save if he/she opts to live at home. You should always weigh-up what you can afford.
How should you budget for clothes and food?
Ridding yourself of debt will also help you stretch your rands when it comes to grocery shopping. It saves to buy in bulk at stores like Makro, because prices are generally lower and you’ll be saving on the travelling costs, too.
Roelofse also suggests capitalizing on loyalty deals offered by companies like Discovery Vitality, where you can get 25% off your purchase of healthy foods at Pick n Pay.
When it comes to clothes, try to stay clear of clothing accounts. Although many accounts can be paid over six months’ interest free, falling behind on your payments leads to high interest charges.
Justmoney’s tips for single moms:
Steer clear of debt - it can rob you of investing in your family’s future.
When investing, opt for short-term savings to provide access to money when you and you children may need it the most.
Roelofse adds that if you save 30% of your income for provisions and 30% for debt, you should gain adequate control over your financial requirements.