There are few experiences in life that are as traumatic as losing a spouse. When life is upended through a divorce or the passing of your partner, it can be highly emotional—and it also presents a serious financial challenge. Seeking financial help for single parents is a first step in this new phase of life. As you navigate an unfamiliar landscape, start by addressing the practical details of single parent finances in order to carry on and provide for your child.
Becoming a widow or widower can be particularly challenging. The New York Life Foundation has created an online resource to guide families and communities in supporting bereaved children. Healing is possible, and it will happen. But it isn’t easy, and it takes time. The immediate-term tips for single parents surround the decisions that need to be made to protect your family’s future.
Here are some of the ways a financial professional can help guide you through this transition.
Revise your estate-planning documents
It’s essential that you update your will and other estate-planning documents to reflect the change in your family’s situation. You should consult with a lawyer to assist you with this. Update your beneficiaries on your IRA, 401(k), and insurance policy; update any powers of attorney or health directives. You may also want to update your children’s guardian appointments.
Purchase life insurance or update your existing coverage
As a single parent, you need to protect your children. Talk with a financial professional to assess your life insurance coverage and about the right type of life insurance for your family. Make sure you have enough coverage to provide adequately for your children should something happen to you. The goal is to personalize your insurance coverage to best suit your family’s goals—college, retirement.
Review all of your financial documents
To give yourself a clear picture of your entire financial situation, you’ll want to review all of your bills, bank statements, and any other documents that help you understand your family’s assets and liabilities. Assess your retirement accounts. If you previously were not the one managing the family finances, you will have to step into this role. Get help if you need it—whether that’s from a friend, a relative, or a financial professional.
Create your new budget
When you know how much money you have coming in and going out, it’s time to draw up your new budget. This should include building up an emergency fund if you don’t have one. Emergency savings are even more important when you don’t have a partner to potentially rely on. If you and your partner have separated, that means you’re also separating your finances. Managing finances after divorce is often complicated, so they will have to be figured out legally and then worked into your new budget.
If possible, don’t make any major financial decisions right away, like selling your house or choosing what to do with a life insurance benefit. Take some time to adjust to your new role as a single parent. You may find, as the months go by, that your financial priorities shift.
Take care of yourself and your family
Every new decision you make as a single parent should be to care for your family and provide a stable life for your kids. Being a single parent requires love and fortitude, so remind yourself that you’re undergoing one of life’s great trials. And with the right knowledge and guidance, you can come through it in good shape.