Being a single parent to a minor child can feel overwhelming, especially when you’re solely responsible for daily expenses, education costs, and long-term planning. Unlike two-parent households, there’s often no financial fallback, which makes it even more important to build a solid plan that prepares for both expected and unforeseen events. Here are practical financial strategies to help single parents safeguard their family’s future.
Appoint a guardian for your child: If you are the sole natural guardian, it’s crucial to appoint a trusted person in your will to assume guardianship should you pass away. If the other parent is still alive, they will automatically continue as the child’s natural guardian, but it’s wise to formally document your wishes to avoid future disputes.
Draft a valid, well-structured will: Your will is the cornerstone of your estate plan. Children under 18 can’t legally inherit cash or manage inherited assets. If you leave assets directly to your child, a guardian, who could well be your ex-spouse, will manage those on their behalf. To avoid this, ensure your will includes a testamentary trust to manage the inheritance for your child until they are old enough to take control.
Consider a testamentary trust: A testamentary trust is created within your will and only comes into effect if you pass away. It allows you to nominate trustees to manage assets for your child’s benefit until they reach an age you specify. Because the trust only exists if your will is valid, it’s essential to have your will professionally drafted by a fiduciary expert to avoid it being declared invalid.
Nominate trustees with care: Choose trustees who are both capable and trustworthy. Ideally, name three trustees—two who know your child personally, such as family or friends, and one independent trustee with professional financial expertise. Their role will be to make decisions in the best interests of your child, so choose individuals who understand your values and your child’s needs.
Put income protection in place: As a single parent, your ability to earn an income is your most valuable asset. Without a partner to fall back on, income protection insurance can safeguard you if illness or disability prevents you from working. This area of financial planning is complex, and an independent advisor can help structure the appropriate cover based on your occupation and financial responsibilities.
Ensure sufficient life cover: Your child’s financial well-being in the event of your death should be a top priority. If the child’s other parent is financially involved, the burden may be shared. But if you’re the sole provider, ensure you have adequate life cover in place. If you’ve established a testamentary trust, name the trust, not your child, as the beneficiary of the life policy to ensure that the funds are properly managed. Also, review the beneficiary nomination on any group life cover and confirm whether it is an approved or unapproved benefit, as this affects how and when the benefit is paid.
Don’t neglect your retirement fund: While saving for your child’s education is important, your retirement savings should not be overlooked. Without adequate retirement funding, you may one day become financially dependent on your child, which is a situation best avoided. Remember, you can borrow money for education, but not for retirement. There are also various bursaries, scholarships, and student loan options available to support your child through tertiary education.
Build a strong support system: Surrounding yourself with a reliable support network provides both emotional reassurance and practical assistance. Many single parents find ways to share costs for au pairs, tutoring, babysitting, or even accommodation. Engaging with other single parents can open up opportunities for co-sharing expenses and reduce financial pressure.
Establish an emergency fund: Emergencies can derail your financial stability. If the other parent is inconsistent with maintenance payments, try to save the equivalent of three months’ maintenance as a buffer. Set up a separate emergency savings account and begin with small, consistent contributions. Even modest reserves can prevent you from relying on expensive debt in a crisis.
Prioritise medical aid: Although medical aid can be a significant monthly expense, it’s an essential safety net. Private healthcare is unaffordable without it, especially in the case of unexpected hospitalisation. At the very least, consider a core hospital plan for you and your child. Network options are available at lower costs and can provide basic but vital protection.
By proactively addressing each of these areas, single parents can create a secure financial foundation for their children and themselves. While the road can be challenging, having a plan in place gives you confidence and peace of mind, knowing you’ve taken the necessary steps to protect your family’s future.
* Tapfuma is a Certified Financial Planner professional at Crue Invest.
PERSONAL FINANCE
