According to the Human Sciences Research Council, around 60% of South African children have an absent father, although more recent estimates are even higher. Forty percent of mothers are single parents and only about 25% of children are part of a nuclear family.
Motherhood is not easy, particularly when you’re going it alone. Besides the gender pay gap and running a single-income household, single mothers face other challenges that mothers with partners don’t experience. When it comes to renting property, for instance, single mothers are considered high risk by landlords, because of the high chance of a father defaulting on his maintenance obligations. Time spent in court fighting for maintenance payments or maintenance increases impacts single mothers’ earnings and emotional reserves. Retrenchment or job loss is felt more acutely, as single mothers generally don’t have a partner’s income to fall back on.
In order for single mothers to fortify their financial positions, consider the following:
Communicate with your child about money
Children as young as three years old can grasp basic financial concepts, so begin communicating with your child as soon as possible about money. Frame all talk about finances in a positive manner to ensure that your child grows up to have a healthy relationship with money. Be honest with your child about what you can afford and allow her to contemplate the differences between ‘wants’ and ‘needs’ as early as possible.
Avoid feeling guilty
Most single mothers have to hold down full-time employment in order to make ends meet, making them feel guilty for not being fully available for their child. Besides the added stress that guilt adds to one’s emotional load, it can also cause some moms to over-compensate by spoiling their child materially which in turn can create additional and unnecessary financial pressure. Instead, consider that your work ethic and commitment to your job will set an excellent example to your child and teach her valuable lessons about working hard and finding your true vocation in life.
Carefully consider where you live, work and send your child to school
Single mothers are generally time-poor, so think carefully about where you live, work and send your child to school. Any extra travel requirements will create additional time burden for you and increase your travel costs.
Ask for a raise and negotiate everything
Women tend to shy away from negotiating or asking for what they want, and this can have long-term effects on their ability to build wealth. While institutional discrimination and inequalities play a role in the gender wage gap, women often compromise themselves by not asking for what they actually want.
In their book, ‘Women don’t ask’ (Babock and Laschever, 2007) the authors studied the starting salaries of masters graduates from the same university. Looking exclusively at gender, they noted that men earned on average 7.6% more than women. Exploring this finding further, they discovered that while 57% of the men had negotiated their starting salaries upwards, only 7% of the women had negotiated their income, while the rest simply accepted the initial offer. Learn to ask for a raise and negotiate everything.
Negotiate flexible working hours with your employer
Depending on the nature of your work, you may want to consider negotiating more flexible working hours with your employer, especially as increased connectivity allows us to work from just about anywhere in the world. With major cities being overly congested, many companies are already creating more flexible working hours so that employees can avoid peak traffic hours and be more productive with their time.
Protect your income
Loss of income is one of the single biggest threats facing single mothers. Running a single-income household means that there is no back-up plan if you fall ill or become disabled, whether permanently or temporarily. An income protection benefit is insurance cover that protects your income if your illness or disability prevents you from working. Even a temporary loss of income, such as in the case of a hairdresser who breaks her arm and cannot work for three months, can derail one’s financial plan and sink one into debt, and it is always advisable to take out income protection.
Take out life insurance
Providing for your child financially in the event of your death will naturally be top of mind, especially where the father does not contribute financially towards child support. You may want to consider taking out enough life cover to provide for your child’s living and education costs until she reaches age least 18 years of age, although many people prefer to provide sufficiently until the child reaches age 23 years – factoring in the costs of a four-year tertiary education.
Draft your will
Having a Will is absolutely essential as this document will, amongst other things, allow you to nominate a guardian for your child in the event of your passing. If you do not nominate a legal guardian for your child in your Will, the state will appoint a guardian on your behalf and it may not be the person you would prefer to look after your child. Setting up a testamentary trust in your Will is advisable as this will ensure that the assets bequeathed to your child will be managed by trustees appointed by yourself and in your child’s best interest. As a single parent, consider drafting a Letter of Wishes in which you can set out further detail as to how you would like your child raised in terms of education, religion, spiritual upbringing and morals.
Open a tax-free savings account
Tax-free savings accounts (TFSAs) allow you to save up to R33 000 per year, with all proceeds from the account being free from tax, including interest income, capital gains and dividends. This vehicle is an excellent way of saving for your child’s future education in a tax-efficient way. Most assets managers, insurers and banks offer TFSAs which can be invested in equities, fixed income accounts or both.
Consider a second source of income
If possible, consider looking for a second source of income to help supplement your income. Tutoring, freelance writing, blogging, monetising a website, web or graphic design, photography or research participation are just ways in which you can generate an extra bit of income.
Simplify your budget and your banking
Being solely responsible for the household’s finances, it makes sense to simplify your budget and your banking. Rather than operating lots of separate accounts, try to consolidate your banking through a single bank with as few accounts as possible. Co-ordinate it so that all your debit orders run on the same day as this will help you keep track of expenses.
Stay on your medical aid
Avoid the temptation to cut back on medical aid and gap cover costs when things get tight. Ensure that you and your child remain on a good medical option and that there is no break in your membership. Gap cover, which covers the shortfall between what is charged by the doctor or specialist in hospital and the amount paid by your medical aid, can be a life-saver should you or your child need to be hospitalised.
Save for your child’s education
Start putting aside money now for your child’s future education, even if it is a nominal amount every month. A unit trust portfolio is an excellent vehicle for funding for your child’s education needs. Instead of birthday and Christmas gifts, let your friends and family know that you would prefer money to put into your child’s education fund.