Being a single parent is one significant role to play and it isn’t easy. Raising a child all alone is one huge responsibility. Yet you hold firmly to that and do whatever it takes to make ends meet.
Financially speaking, solo parents or unwed individuals used to face numerous financial dilemmas. And what fears them most is losing up their hard-earned emergency funds.
There are many factors that a solo parent is tempted to use their emergency fund. However, one wrong move can make your fund disappear, leaving you in the most unfavorable situation.
Before you use your emergency fund, it’s best to identify when you should use it. One way to do it is to ask yourself the questions cited in this article. But before that, let’s discuss what a solo parent encounters along the way.
Here are the top five challenges that single parents are facing:
- Limited Source of Income
- Child Care and Support
- Credit and Debts
If you’re working and earning a regular income, then you’re lucky. You just have to manage it well while balancing your parenting duties. But things are different to others. Some might be in danger of losing their jobs and have to hunt for another one. Some were underpaid, which is why they need to find a side-hustle job to provide additional money.
It’s challenging to raise a child all alone. And it’s way tougher to raise more than one. You need to keep your eye on their health, education, meal and other needs.
Depending alone on your monthly income won’t be enough. Remember, you still have to take care of yourself aside from your child’s necessities. That’s when some solo parents are using little loans NZ or short term loans NZ through legal financial institutions.
But due to life errands and other demands, solo parents tend to mishandle credits and debts. Thus, affecting your finances.
That’s how things happen to a single parent. And that’s why it’s best to save and build an emergency fund. It’s the only option you can use when your money runs really tight.
But use it only, if and only if, you can answer the following questions.
Am I wasting my emergency fund on unnecessary things?
“First things, first,” as they say. Meaning, you must prioritize what needs to be settled. Identify whether you’re wasting money on your family’s needs or not. There are lots of things now that were thought of as a need. For example, you bought a hand soap dispenser and got broke after a few weeks.
Buying this kind of stuff is just a waste of money since it’s not categorized as needed. Yes, it made washing your hands convenient, but it’s not just what you really need, though. Even without a hand soap dispenser, you can still live. I mean, you can just get a bar of soap and wash your hand with it.
Other things identified as wants are fancy items, car accessories, high-end gadgets, and mobile phones.
Never use your emergency funds for nothing. Use it only if you need it. For example, you’re going to pay bills. Yet, the total cost of your accounts is higher than what you expect. In that case, if you don’t have any other options, you can use the fund to cover it.
Is it urgent or not?
When we say urgent, it means you need it immediately. For instance, you’re working from home, and your laptop went broke. With that, you need to have it fixed. Otherwise, you can’t work. It may cause you to lose a job or client (if you’re a freelancer).
There are lots of urgent life situations you can face. Whatever it may be, it is reasonable to use your emergency fund.
Is this uncertain event what I’ve been preparing for?
We build emergency funds designed only to cover up things whenever we face uncertain life events. We can’t say when we’ll meet them. So being prepared is the only way you can face it in the future.
Here are the common uncertain events that a solo parent encounters:
- You lost your job.
- Your child got sick and needs medical support.
- Your town got hit by a storm surge.
- You got into a vehicular accident.
As you can observe, these situations need a hefty fund to support you along the way. That’s why you should build a big emergency fund. Usually, you make an emergency fund that can cover up your expenses for three to six months.
Could there be any other ways to pay short-term expenses?
Covering your short-term expenses using your emergency fund is not a wise choice. Instead, you should look for other alternatives to pay for it. There are lots of solutions that you might not be aware of yet.
Using our credit card is one way to pay for short-term spendings. Just be sure to pay it off timely to prevent interest fees.
How long will it take for me to rebuild my Emergency Fund if I use it?
Creating an emergency fund takes time. You take immense sacrifices before you can achieve your target fund. If you use it, the question in how will you build it back?
Will start and save at least 50% or less? You have to re-assess your financial state and your commitment to rebuilding the said fund. In this case, you have to be more disciplined when it comes to spendings.
If you have a child, you can talk with them and let them understand the significance of rebuilding the fund. They can help you with it. Along the way, they can duplicate what you do when they grow up.
Letting your child learn the basics of handling money will mold them to be diligent savers. Working together can help you achieve the emergency fund faster.
Save money together. Learn to cut off unnecessary expenses and focus on your needs. If you think you need another part time job to add funds, do it. It might require extra effort. But if it’s for the best, why not?