Being a single parent can be incredibly challenging. Besides being the emotional and social anchor for your children, you also need to take care of the finances of your household. As a single parent, money management can be difficult but you can achieve your dreams and those of your children by adopting some common strategies of financial planning for parents tweaked as per your unique situation. In addition to various savings and investment plans, another indispensable tool for you is single parent insurance plan.
 

Common Financial Goals for Single Parents
  

As a single parent, you must have clarity on your financial goals and the resources you have at your disposal to fulfil said goals. Here are some of the common financial goals for a single parent:
 

1. Have a Balanced Budget: The first financial goal for a single parent is drafting a budget detailing their monthly and/or annual incomes and expenses. Having a clear understanding of the aforementioned variables enables you to know whether there is a gap between your earnings and expenditures and plan on how to bridge that gap.
   
2. Set Aside Money for Household Expenses: By creating a clear budget, you can set aside a certain amount of your earnings towards your household expenses, including the education of your children and the medical bills of the family, if any. This way, you can determine the amount you can park in a savings plan.
   
3. Save Money for Your Children's Future: You should estimate the potential cost of your children's education and ascertain the funds that will be required to handle those expenses. It is important to factor in inflation whilst making these calculations. Once you know how much money you will need for your children's higher education, you can look at various investment options to attain that financial goal.
   
4. Save Money for Your Life after Retirement: As important as it is to save money for your children's dreams, you must not neglect your own future financial needs in the process. It is advisable to opt for a pension plan that can help you build a corpus for the future.
   
5. Have a Contingency Plan In Place: Life has no dearth of curveballs which is why you must have a contingency plan and fund in place for unexpected expenses such as an accident or a critical illness.
    

By adhering to some basic rules of financial planning and discipline, you can attain all of your financial goals. If you are a single mom, you can benefit from the specific savings plans designed for women as well as the additional discounts for female policyholders.
 

Instruments Single Parents Can Choose
 

Now let us look at some of the insurance savings products that can help single parents achieve their financial goals.
 

1. Term life insurance: This is an indispensable product for a single parent as it is affordable and offers more coverage for lesser premium. The death benefit under a term plan can be of substantial help for your child when you are not around to bring in a regular stream of income.
2. Endowment plans: These plans combine savings and insurance by providing a lump sum benefit at the maturity of the policy while life cover is provided during the policy term. The maturity benefit is certain and paid at a multiplier of the premiums paid. You can choose the premium payment term according to the selected sum assured.
3. Guaranteed¹ income plans: If you are looking for a plan to build a corpus for your retirement, you can use a pension calculator to estimate the amount you would need when you stop working. You should also account for inflation and the potential medical expenses associated with ageing. Based on the amount required, you can compute the premium to be paid for your pension plan. Guaranteed¹ income plans are dynamic as they provide non-market-linked returns² and thereby offer assured returns on investments.
4. ULIPs: These plans offer life insurance and returns and are usually selected to build a significant corpus over a long term, typically between 10 to 15 years. In a ULIP plan, a part of the premium is invested in market-linked funds. Depending on your risk appetite, you can choose high but volatile equity-linked funds or risk-free and fixed debt-based funds.
    

Steps In Financial Planning For Single Parents
 

You can follow financial planning for parents and ensure that the gap between your financial goals and the financial situation gets minimised. By applying money management, planning, and discipline, you can attain all of your financial goals.

1. Plan for the future

   The joy of the birth of a child is multiplied manifold when you see them progressing in life and achieving their dreams. You need to have a strong financial framework for supporting them in their aspirations. As a parent, your main goals are likely to include a good education for your child, a backup plan for their professional journey, and a fund to fall back on or have regular income from if necessary. Furthermore, your child's wedding is a happy occasion but one that involves significant expenditure, particularly in the Indian context.
   




2. Be clear about your financial commitments

   Financial planning is always time-dependent. Therefore, you should be clear of your short-term, medium-term, and long-term financial needs. You should also identify the time by which any outstanding loans such as a home loan would be fully settled. Considering the expected tenure of your working life, the ideal amount you would need as a pension after retirement should also be computed.
   




3. Look for various investment options

   The next step in financial planning for a single parent is to research different financial products and understand their suitability for your specific financial objectives. For example, if your child is in school, say in grade 5, then you should estimate the cost of their higher education and choose a savings plan accordingly.
   




4. Diversify Your Investment

   Budgeting and financial discipline are the two watchwords for a stress-free journey towards self-reliance. Thus, you must estimate your income from all sources and list down your total monthly expenses. Avoid impulsive expenditure and look for saving opportunities. You should ensure adequate allocation amongst the savings and investment avenues you have chosen and monitor them closely. Keep the renewals and payment due dates in mind and do not default on any payments.
    

   You can choose a life insurance policy that has a savings option attached to it. For instance, at Tata AIA, we have diverse life insurance plans that can help you fulfil your financial goals.
    

   Our Guaranteed¹ Savings Plans, especially the monthly income plans can double up as retirement solutions and offer:
    

   1. A guaranteed¹ monthly stream of income for a period not exceeding 288 months
   2. A life insurance cover
   3. The option to top-up your monthly income with an additional premium
   4. The flexibility to include additional features in the policy through various riders^#
       

Conclusion
 

Single parents can have a seamless journey towards financial freedom and the attainment of their financial goals. However, it is important to have financial planning and discipline in your financial behaviour. If required, you can seek the advice of professionals and manage your finances in a more efficient manner. With pragmatic financial planning and prudent expenditure control, single parents can look forward to a joyful and financially secure life.

L&C/Advt/2023/Jan/0252