Not only do you have to constantly juggle your time and energy, but you also have the added stress of supporting a family on only one income without any help in terms of looking after the kids.
By learning to manage your finances, you can alleviate some of that stress. Knowing that your family is secure financially means that you can focus on giving them the love and care they need, while you build a rewarding and fulfilling career at the same time.
Here are our top tips for financial security for you and your family.
Sort out your will and nominate an executor
This is important for any parent, but especially if you are the sole parent or guardian of your children. You need to ensure that all admin is sorted out should anything happen to you. Choose somebody who will be responsible for looking after your children should you pass away, decide upon inheritance amounts and the ages they’ll receive them and importantly, nominate an executor for your estate. They’ll ensure that your dependents are taken care of, the right fees are paid to the right people, inheritances are received at the right time and similar decisions. Do make sure you discuss this with the person you plan to nominate way in advance. If possible, make sure this person has some sort of financial background such as in accounting or financial planning.
Draw up a budget
A lot of people prefer to turn a blind eye to their spending, but in order to budget properly you need to know where your money is going. This task can be a little time consuming, but it’s worth it! The first step is to print off 3-6 months of bank statements. Look through them all and categorise your spending. Add up the total cost for each category over the time period, then divide it by however many months you’re working on to find the average. Include everything from petrol to toiletries.
After that, you need to work out where you can cut back. Decide upon a reasonable sum to save each month and look at your expenses to see where you can make it back. You may find that your outgoings on fast food, groceries or entertainment for instance, are far higher than you realised. Phone around to see if you can negotiate rates on your cellphone contract, insurance premiums or interest rates for store cards or similar. If your outgoings are still too high, you may need to make some lifestyle changes. These could be as small as switching to no name brands or shopping once a month instead of every few days and doing dinner parties instead of restaurant meals with friends, or it could mean considering public transport instead of running a car all the time, or moving to a different house and saving on rent and possibly transport costs. Regardless of what changes you make, the important thing is to know what you need to save and set goals on how you’ll achieve it, and then stick to those goals.
Have an emergency fund
This could form part of the ‘budget’ section but it’s important enough to warrant its own title. Make sure you save a little bit each month for emergencies – whether it’s a health crisis, a robbery or you losing your job. Try to save up at least three months’ salary, and keep it in an account where you can access it immediately. All other savings can go into an investment account or high interest savings account with a long notice period.
Take out life insurance
Life insurance is crucial for almost all parents, but if you’re the sole breadwinner for the family and your kids depend on you, then it is doubly important that you ensure they’re sufficiently provided for should anything happen to you. Do this at the same time as you plan your will to ensure that financially, everything is taken care of. Not sure how much you need? If you have any debt such as cars or houses, you’ll often need between 10-20x your annual salary in life cover. It isn’t as expensive as you might think. In fact, you can get R500 000 life cover for as little as R5 a day. Taking this out may feel like a gamble, but you’ll sleep easy knowing that should the worst happen, your kids will still be able to live in the house, attend university and live the life you always dreamed of for them.
Make medical aid a priority
Medical aid is expensive, there’s no doubt about it. However, one car accident or health crisis can set you back hundreds of thousands if you lack medical aid. On top of that, you may have to take unpaid leave if you or a family member requires a lot of time at home, which adds to the financial burden. Ensuring you have medical cover means you can plan for the expenses each month, rather than be landed with a hefty bill if something were to go wrong.
Many medical schemes allow you to pay a fee based on a percentage of your salary, so if you earn a low income, this can be a great option. You also get to provide medical aid for your kids for a vastly reduced rate if you’re a member on most medical aid schemes. If comprehensive medical aid is completely out of the question, make provision for medical emergencies by taking out a hospital plan.
Teach your kids everything you’ve learnt
As they grow up, kids need to learn to budget and be self-sufficient. One of the greatest gifts you can give them is the ability to effectively manage their finances just as you did while you were raising them. Let them learn from an early age by enlisting their help with the shopping budget, allowing them to choose one ‘treat’ item per week which is under, say, R20. As they get older they can begin to earn money by doing chores or getting a part time job, and there is absolutely no harm in insisting they save at least half – some parents choose to “take” a certain amount of any earnings to teach older children about rent, taxes or similar. The catch is that they give it back when their child begins university, buys a house or reaches another milestone. This is a great lesson as the chances are your child would have never saved that amount by his or herself, so they learn the value of long term savings plans.