How to Reduce Debt and Manage Money As a Single ParentMar 17, 2019
The goal to reduce debt and manage finances is tough enough in a two-income household — that’s why, in light of International Women’s Day, we wanted to offer a little advice and support to those moms who earn the paycheques, take care of the kids and deal with all those day-to-day ups and downs on their own.
Which financial factors affect women most?
As if parenting wasn’t already a full-time job in a two-parent household, somehow single parents cover both roles, plus the daily household chores and expenses. The downside, of course is that there’s no one else to step in when you’re burnt out and exhausted. And, there’s no one to lighten the financial load. This can unfortunately lead to a reliance on credit card debt to fill in the income gaps.
According to our affordability and debt poll from last fall, women are more likely than men to struggle with a heavy debt load and have a harder time affording basic essentials such as transportation costs. They’re also more likely to find it harder to save for a major purchase or retirement.
Stats Canada reports that single mothers make up to $27,900 less than single fathers. This may be partially due to the fact that women are more likely than men to take time off work to care for children and other family members.
How to reduce your debt and manage your finances on a single income
As the head of a household, it’s a good idea to brush up on your financial literacy skills in order to keep personal debt in check and create long-term financial security. With a single income, it can be tough, but not impossible! Here’s where you can start:
- Track your spending. Even on a tight budget, you may have money leaks you’re unaware of. Subscription services, cell-phone plan add-ons, or cable channels that can be trimmed. Use our budget worksheet or download a budgeting app that will help you see all your expenses at a glance and allow you to trim unnecessary ones.
- Know what you owe. Before you can take steps to reduce debt, you need to see exactly what you’re dealing with. Use this debt calculator to tally up those balances.
- Find a debt repayment strategy you can stick to. Consistency is key when it comes to tackling any new skill. Financial skills are no different. Paying off debt can feel like an overwhelming task, which is why it’s best to simplify the way you reduce debt.
- Try using a DIY method such as the debt snowball method which involves putting extra money toward your smallest debt until it’s entirely paid off. As you’re doing this, you will continue to make minimum payments on all other debts.
- Speak to a debt professional such as a Licensed Insolvency Trustee who will go over all the details of your personal debt and recommend a tailored solution to get you out of debt.
- Compare your options by plugging your debt numbers into our repayment options calculator.
- Keep looking for ways to save. Even on a very tight budget, saving a few dollars each week or month can grow into a good emergency fund. This in turn can be used in lieu of debt when necessary. Look for ways to save even more by utilizing the secondhand market, eating in most often and using any extra money such as tax refunds to secure yourself financially.
- Don’t be afraid to plan for the future. When you feel like you’re always putting out fires, it’s hard to look ahead. However, days, weeks and years will slip by quicker than you think and it’s better to have a plan. To start mapping out your goals, follow this guide to setting savings and investment goals from the Financial Consumer Agency of Canada.
Think you don’t make enough to reduce debt? Think again! Follow the above tips to start your journey toward financial health and also check out these 5 personal finance tips for beginners over at The Wallet Diet.
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