Financial Planning for Single Mothers

There are many large expenses that you need to save for, Single Mothers; college for kids, retirement and other key moments like children's future weddings and childbirth. If you are like me, you probably don't want to think about future bills when you are struggling to pay the mountain of present ones.

In my quest for a more secure financial future, I researched advice from financial advisors, motivational speakers, and successful business owners. Out of the advice that I received from them, I devised my own plan for savings. I am going to share with you my secrets, not for you to only do what I am doing, but to also give you ideals to customize your own financial success. You can see this article as an introduction to other financial advice that I will share with you. Be warned, I am not a financial advisor, but a person interested in this area of my life and researches different ways to make my money work for me.

The first step thing I did when deciding to build a portfolio and savings plan was to access my current income and expenses to develop a budget for myself. This is very important. If you don't access your spending habits, you will never be able to properly manage your money. For the next couple of months, keep close track of how you spend your money. Right down to the last penny, account for every cent that you earn and spend, then document it. I use Microsoft Excel; the Microsoft Office website has many pre-made budget templates that you can download and use for free.

After you accurately (I can't stress enough how important it is to be truthful when documenting how you are currently spending your money), look for areas in your budget that needs improving. The goal of devising this budget should be to save money since this is an article on preparing for the future. Go through your expenses with a fine tooth comb and look for weak spots. By this I mean, find areas where you can cut down or cut altogether. When I did this, I learned that I could save about $100 a month if I stopped smoking. That is $1200 a year, not to mention the health benefits tied to quit smoking.

After cutting unnecessary expenses, look for ways to lower the other necessary expenses. You should basically be living on only about 80% of what you are making. Where the other 20% go depends on you and your beliefs. I usually put 10% in my savings plans and the other 10% goes to God. Once again, this depends on what your beliefs are; you can also use the other 10% to charity or the whole 20% into savings. I've learned that if you put good things out there (giving to your faith or to charity) good things usually come back to you tenfold.

Back to cutting your expenses. Like I said, find areas in your budget that can be cut. For example, you can lower your electric bill if you don't sleep with every light and television in your house on. Clipping coupons can also lower your food bill. I am sure there are other areas that can be cut. You know your budget and habits better than I do, so you know what can be cut and what can't.

After you have devised a new budget, stick with it. You've just wasted all that work and time if you don't take it seriously and abide by your new budget. This is very important. You don't have to 'penny pitch', but you do have to be reasonable and not frivolous with your money.

In the next part of this article, I will talk about how I invest the 10% I have put aside. Also, I will give you other tips as to finding money to invest and where you can put it. I will not advise you on what stocks you should pick, but a way for you to investigate and pick your own investments.

Previously, we talked about getting a handle on your money by devising a budget. By now, most of you should have some idea of where your money is going and what you can put aside for investments. If you haven't taken the time to thoroughly go through your budget with a fine tooth comb, stop right here. Do not jump before you can get your balance. You need to straighten out the current situation before piling on more expenses.

This is the plan that I used for when I decided that I should be starting a nest egg. Good thing for me that I fall between a current tax bracket and usually receives a refund at the beginning of the year. Instead of using the money for my own personal holiday this year (like I usually do) I put the money aside and seriously thought considered what I was going to do with it. Don't worry you don't have to be receiving a large sum of money at one time to go with this plan; you can start with the 10% we talked about in the last article.

What you need to do is think of yourself as a business. If you aren't willing to pay yourself, then you are missing out on the most important bill. Faithfully put that designated amount, no matter how much you can afford to put aside, in your accounts every pay period. If there is a way to get it payroll deducted, then do it. This is the best way to do it. If you don't see it, then you won't miss it. If payroll deduction isn't possible, then take it out of your paycheck as soon as you get your hands on it. Don't wait. If you do there is a highly unlikely chance that you will spend it on other things.

You need to then divide your investment money into three buckets; security, risk, and fun bucket. The 'security' bucket should be some type of investment that is heavily secure. Because these types of investments usually don't pay out huge amounts of interest, this account won't make you rich in the short-term. This should be used only for you long-term financial plan.

The next bucket, your 'risk' budget, isn't as secure as the first one. There is a big chance that you can lose big with this one, but you can also win big; that is why it is called a risk. Generally, these types of investments pay huge interest, so they are perfect for short-term financial planning. The trick to this type of investments is to take out your profits as soon as they are gained. Divide them up into three and put them back into each one of your buckets. This way, if you lose with your 'risk' bucket, it won't be for everything you have earned since.

The last bucket, the 'fun' budget, can be used as a savings for anything you desire. If you want a new car, house, wardrobe, or vacation, use the 'fun' budget to save for these events. As with everything in life, especially when preparing for the future, if you don't reward yourself then all the pleasure is gone and it becomes tedious.

I can't advice you on what particular investments you should partake in. Research and gather all the information you can before deciding on investments. If you hire an advisor, don't be lead blindly. Don't give someone all the power over your money and financial decisions. In the next installment, we will talk about resources when researching different investment possibilities.