When it comes to parenting, it's great to have your partner help out with the bills. However, due to one reason or the other, you can end up doing this alone and raising a child on a single income. When this happens, you need to know how to manage your money well to take care of your child.
You can afford a baby as a single parent in Canada, but it takes some careful planning, especially with the rising cost of living. This article will teach you how to raise a child alone financially while living on one income in Canada.
Learn How to Budget and Stick to It
Knowing how to create a realistic budget and stick with it is an important life skill, especially as a single parent. A budget helps you to plan your income so you can meet all your expenses without the need to borrow money. With a budget, you're better able to differentiate needs from wants and invest accordingly.
More than helping you manage your money efficiently, a reasonable budget will help you build up your emergency funds for unexpected expenses. Your child may fall ill without warning, and you need money to take care of their bills, even if you have health insurance.
If you want to stop living from paycheck to paycheck, especially as you have extra responsibility, you need to commit to budgeting. This way, you can handle the cost of raising a child and still meet your savings and investment goals.
Learn about Tax Breaks and Government Programs That Can Offer Assistance
Raising a child on a single income is challenging, and you could probably use some help. Luckily, the Canadian government provides benefits for single parents to overcome the costs of raising a toddler. Take advantage of these benefits to reduce your financial burden.
For example, you can receive extra money with the Canadian Child Benefit if you have one or two kids who are younger than 18. You can get up to $6,639 every year if your child is less than six years old. Parents of children aged 6–17 get $5,602 per child.
Consider opening a Registered Education Savings Plan (RESP) to help you build up funds for your kids college education in the long term. If you can save up to $500 in a year, the government will offer a 10% or 20% match to your contribution. You can also claim your children's care benefits as well as their tax credit, along with social assistance loans.
Learn How to Save Money on a Routine Basis
Saving money is hard when you have a child to cater to. One minute you're trying to build your emergency stash, the next minute, you're heading to the store to buy your 5-year-old their favorite sweet or toy. This is why you need to learn how to keep some money aside, even when it seems impossible.
It is recommended to create a schedule for your savings—you can set up automatic payments into your savings account on a specific day of the month. Also, find and use coupons to cut down on how much you spend at the grocery store and other items.
Now, to the hard part: You need to cancel or eliminate any unnecessary expenses. This means no eating out when you can make a meal at home, no impulse stops by the store, and fewer movie nights.
Don't forget to take out some time to check your insurance rates. You'd be surprised how much money you can save.
Don’t Overlook Planning for the Future
If you want to pull through as a single-income family, you should make financial plans for the future. The first thing you need to do is build an emergency savings account to cover about three to six months of your basic expenses. This will help when unforeseen circumstances happen.
When push comes to shove, if you need to get a loan, you might consider looking into your options to cover extra costs that can and do come up. So, take some time to learn about the different credit line options and how they work.
Investing in life insurance is another strategic plan. If you pass away suddenly, your child(ren) can fall back on your insurance as a financial safety net. This money can see them through high school and help them take care of other living expenses until they can fend for themselves.
Find Opportunities to Earn Extra Income
When you have more money, you can take better care of your child, so look for ways to increase your earning power. If you have the time, you can take up another part-time job or learn a new skill that pays more.
There are several ways to generate additional income for your one-income family. If you have items you no longer use at home, you can put them up for sale. If you have a stay-at-home partner, they can try registering as an online or part-time tutor, babysitting, signing up for Uber in their spare time, and starting their own business. The bottom line is making sure you improve your financial situation.
Don't Be Afraid to Ask for Help
When everything starts to seem overwhelming, take a break and ask for help. You can join support groups in your community where you can share challenges with other single-income families. Please speak with your friends and family too, whenever you need their assistance.
You should consider hiring a financial coach if you can afford it. A financial coach can improve your personal finance habits and show you the best strategies for increasing your income and avoiding debt. Whenever you have to get fast cash, your coach will show you how to source loans from a reputable lender and other forms of credit lines.
With the right frugal mindset and intelligent decision-making, you can pull through as a single-income household in Canada.
As long as you do not live above your means, you can take on any challenges that come with raising kids on a single income.