High net worth individuals often have professional money managers and they can access wealth management product from banks. Unfortunately, most of us do not have access to such personalized wealth management services. In fact, it is even exponentially harder for a single parent to manage finances effectively because they are often more concerned about stretching the dollar their monitoring where each dime goes.
However, the fact that you can’t access wealth management services is not enough reason to take the back seat and watch your finances drift by rudderless. This piece provides 5 actionable tips for managing your money like a professional wealth manager.
Start by knowing your money
You can’t manage your finances effectively until you know all there is to know about your money. If you were previously married, it is quite possible that your spouse was in charge of money matters and you might feel helpless now that they are no longer in your life. Fortunately, knowing your money is simple – you need an accurate number on how much money you earn (income) and how much money you spend (expense). Your income includes your salary, dividends, and guaranteed return on other investments. Your expenses include groceries, bills, debts, and other financial obligations. Simply put, your income must be higher than your expenses for you to experience financial stability.
Organizing your finances makes things neat
It is not always in your best interest to keep multiple bank accounts for different purposes because you could easily lose sight of the big picture on your money (back to point 1). However, if you have multiple bank accounts, you may want to keep things neat and tidy by using a single email for banking receipts, bills, and bank statements. You should also have a “money day” each month when you review your credit card and bank accounts. You should also not forget to request for your credit score each year in order to know your creditworthiness and correct any anomaly.
Your guess is usually wrong, use a budget
A budget is an unassuming tool that could have a massive impact on your ability to manage your money effectively. A budget helps you allocate your money to different items on your expense column so that you don’t run out of money while the most important bills remain unpaid.
As a single parent, you should ideally set money aside for rent, groceries, utilities, and debt repayment. When creating your budget, you should also create a little splurge expense for treating yourself to some things in order to avoid frugal fatigue because it is easy to get worn out when you are mom + dad at the same time. Creating a budget is only half the battle, you need to ensure that you stick to the budget even when it is easier to discard the budget and spend money based on your emotions.
Paying bills on time will save you money
Many people don’t like paying bills because it could be emotionally draining watching money flow out of your account. In fact, many people often put off paying bills until the last possible moment. However, as a single parent, you’ll need to accept the reality of bills and become comfortable with paying them alone.
Of course, you should review your bills and cancel unnecessary items such as cable TV. Nonetheless, paying bills as soon as you receive them will reduce your financial stress and protect you from incurring late charges. You should also consider setting up automatic payments for your recurrent bills such as utilities and rent.
Playing the odds is foolish, buy insurance
Many people have a false sense of security in thinking that they are immune from the lemons that life throws at us all. You need health insurance, property insurance, auto insurance, and liability insurance among others. Buying insurance is a no-brainer financial move for a single parent you’ll save you money in the long term even if you don’t file a claim. Being insured protects you from risk and helps you to recover losses. Nonetheless, you need to ensure that you buy proper insurance coverage that fits your needs and ensure that buy coverage from a reputable insurance firm.