Six figures per bundle of joy? Financial planning and the single parent

By Wealth of Geeks via AP

The average single parent thinks about their child’s financial future about five times a day. 75% admitted feeling overwhelmed when they became a single parent. With good reason. According to a study conducted by One Poll for the nonprofit life insurance educator Life Happens, the minimal amount of savings an average single parent believes they should have to raise a child comfortably is $332,705.

The study “Single Parents and the Financial Future” surveyed 2,000 single parents, equally split between mothers and fathers.

Single fathers feel more confident about their ability to provide for their children’s future than single mothers (69% vs. 58%). One tenth claim they began their financial planning before the child’s birth. 43% of all single parents admitted not planning their child’s financial future until the child reached early childhood age, about 4 to 6 years old. Finally, 7% had not formed any financial plans whatsover.

Top unexpected expenses for single parents

Seven out of ten single parents in the study believed becoming a parent was a significant financial burden, especially with only one household income.

Childcare costs alone average $14,150 for working, single parents. Bringing a child to the workplace is a rare privilege, even if in-house childcare is available. Hiring a private babysitter is no longer the affordable option it once was, and finding qualified applicants is challenging.

Other significant expenses single parents face include:

Groceries and Formula

56% of those surveyed listed the cost of groceries and baby formula as a major financial concern. Supply chain issues during and after the pandemic limited the availability of powdered baby formula. Increased demand also drove retail prices to record highs until supplies stabilized. Other baby-related grocery shelf items, such as pureed baby foods, diapers, and wipes, also add to the overall expense of raising a child from infancy to toddler.

Budgeting for additional groceries, hygiene items, and supplements is essential.

Government-sponsored grants such as the USDA’s Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program are designed to defray many of these costs for qualified families. But not all single parents meet the income threshold required for participation.

Healthcare Costs

The cost of pediatric healthcare, prescription medications, and home medical supplies is a significant concern for 49% of study participants. Infants develop natural immunities only through exposure and recovery or vaccinations. For parents, this means a child is never too far from a scheduled pediatrician’s exam, an emergency hospital visit, or an urgent care situation.

Many healthcare plans for adults also extend benefits to infants and children, but coverage varies from policy to policy.

Household Expenses and Bills

Nearly half of single parents surveyed considered meeting household expenses and bills a heightened concern when raising a child.

Additional expenses for clothing, car seats, strollers, bedding, and other baby-related items means tightening the household budget for standard expenses such as utilities, mortgage/rent, car payments, insurance, and credit card bills.

Financial Contributions

Financial experts recommend parents prepare for their children’s economic futures by setting up savings plans and college funds as soon as possible, even before the child is born. 48% of single parents expressed interest in funneling excess income into a savings account for their child and investing in life insurance as an additional buffer against future financial hardships.

“A life insurance policy can help provide for your child’s future in many ways, from food, clothing, and shelter to their education,” says Barb Pietrangelo, a financial advisor and chair of Life Happens. “The younger and healthier you are, the more affordable life insurance can be, so exploring your options as early as possible is highly encouraged.”

What Steps Can a Single Parent Take?

The study also explored concrete actions a parent can take to alleviate the financial burden of raising a child on a single income. These include:

Seeking an increase in salary (53%)Switching to a job with better work-life balance (53%)Negotiating for flexible work hours (51%)Picking up an additional job or side hustle (48%)Cutting back on work hours (46%)Started a side business or freelancing to supplement income (42%)Returning to the workforce (38%)Giving up job or career (26%)Downsizing to more affordable housing (25%)Reducing work hours to spend more time with children (21%)Relocating to an area with a lower cost of living (20%)Returning to school to gain marketable skills (12%)”Parenthood brings many new expenses, including some unexpected ones, but it can be especially challenging for single-parent households,” adds Pietrangelo. “As your child’s main source of emotional and financial support, it’s important to plan ahead to ensure they’re financially secure in the event you are unable to be there for them.