The single mother’s guide to financial planning

As sole breadwinners responsible for the welfare of minor children, single mothers face a uniquely challenging financial landscape. Without a partner’s income as a safety net, and with the emotional strain of shouldering the family’s finances alone, the pressure can be immense. Yet, in our experience, single mothers often display a remarkable resilience and resourcefulness in managing their money. In fact, research shows that women tend to be better investors, often seeking professional advice, sticking to their plans, and staying calm during market volatility. With these advantages in mind, there are some practical steps single mothers can take to strengthen their financial positions.

Budgeting and money management: Running a single-income household demands disciplined budgeting. Managing income and expenses through one financial institution can simplify administration, using linked accounts such as a transactional account, credit card, and savings account for emergency funds. Multiple accounts across different institutions can make tracking debit orders, credit card due dates, and interest-free periods unnecessarily complex. A strong credit record is essential, as a single parent’s ability to secure finance rests solely on her own credit profile. As such, responsible credit card management is key, especially since payment history accounts for 35% of one’s overall credit score.

Insurance protection: Two forms of long-term cover are particularly important for single mothers. Income protection insurance replaces your income if illness or disability prevents you from working, either temporarily or permanently, and is critical for a sole breadwinner. However, disability cover is complex, so seek advice from an independent financial planner with expertise in this area. Life cover is equally important, particularly if you lack sufficient capital to fund your child’s future living and education expenses. Again, the correct level of cover, and the structuring of beneficiary nominations should be determined with professional guidance.

Estate planning: Regardless of your net worth, a valid Will and a well-considered estate plan are essential. If your child’s other parent is alive when you pass away, they will be the legal guardian. If you are the sole surviving parent, you must nominate a legal guardian in your Will, considering their age, health, and location. With this in mind, be mindful of the emotional impact if your child would need to relocate to live with them. Because minors cannot inherit directly, assets intended for your child should be left to a testamentary trust created in terms of your Will. This ensures that the trustees you appoint will manage the assets in your child’s best interests. You can also nominate the testamentary trust as the beneficiary of your life policy to avoid estate duty and bypass the Guardian’s Fund. We advise that you avoid DIY Wills, as errors can invalidate them and derail your estate planning objectives.

Saving and investing: An emergency fund is non-negotiable, though building one can be challenging. If you rely on maintenance income for your child, be sure to include a buffer in case of late or missed payments and consider whether the payer has sufficient life cover to meet obligations in the event of their death. While it may be tempting to prioritise your child’s education savings over your own retirement, remember that you cannot borrow for retirement. Even if you can only contribute modestly, start now and increase contributions as your children become financially independent. Education savings should ideally be invested via a transparent, low-cost vehicle such as a unit trust portfolio aligned with your goals, risk profile, and investment horizon. 

Medical aid cover: We all know that medical aid is costly and subject to above-inflation annual premium increases. At a minimum, maintain a basic hospital plan, ensuring no breaks in membership, as network options are usually more affordable. Consulting an independent healthcare adviser can help you select a plan that suits your needs, factoring in any chronic conditions that you may suffer from. Some schemes offer valuable condition-specific programmes, and in some cases, upgrading to a more comprehensive option may be more cost-effective. If you choose a hospital plan, consider building a dedicated reserve for out-of-hospital costs, either within your emergency fund or a separate medical expense account.

While the financial challenges of single motherhood can feel overwhelming, taking deliberate, informed steps can help you protect your child’s future and your own long-term security. With disciplined money management, the right protection in place, and a clear investment and estate plan, you can build a stable financial foundation that will serve you and your family for years to come.

* Tapfuma is a Certified Financial Planner professional at Crue Invest.

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