Build an action plan to protect yourself and your loved ones.

Intentional financial planning sets the stage for long-term success regardless of family situation, but for single parents, the work of setting up a comprehensive plan is crucial. Taking the time to evaluate how to create the future you desire whilst also considering how you’d like to provide for your children will prove worthwhile. It’s also important to revisit your plan as your life changes over the years.

There are several steps you can take now to prioritise your financial needs and prepare for the future.

Set up a budget and recalibrate as necessary

Try different budgeting methods to see what works best for you. The 50/30/20 budget rule allocates 50% for essentials like rent/mortgage and utilities 30% for discretionary spending and 20% to savings. Check in with yourself at regular intervals to adjust what’s not working for you.

Build up your emergency fund

The amount you need in your emergency fund depends on your situation, but in general, experts recommend saving enough to cover three to six months of living expenses. Calculate this based on your critical monthly expenses, including housing and childcare. Focus on steady progress toward your goal by setting aside a set amount or a percentage each month.

Take advantage of tax allowances

he UK offers child benefit payments and other tax-free allowances to parents. If you’re the primary caregiver, you may qualify for these benefits to support our family’s financial health. Consult with a tax adviser to ensure you’re claiming all eligible allowances and credits.

Save for your childrens’ future

Consider opening a Junior Individuals Savings Account (ISA), a tax-efficient savings account for children or a Child Trust Fund, if your child qualifies. These saving options can provide for their education or future expenses.

Don’t forget yourself

It may feel like less of a priority to save for your future when your focus is on your children, but it’s still important. Leverage UK pension schemes and explore personal pensions or self-invested personal pensions (SIPPs).

Establishing a trust is essential

Estate planning is another important piece of financial planning for single parents. Setting up a will and trust ensures your wishes are documented and puts a framework in place for your children’s future.

A trust in the UK can accept funds from your estate, pension and life insurance policy. This sets out your preferences and expectations for your child, including guardianship and how funds will be used.

Consult a solicitor specialising in estate planning to navigate the process and create a detailed plan. Address key questions like:

• Who will take care of the child?
• How much money should the trust ideally have upon the parent’s death?
• How will the money in the trust primarily be used?

Being a single parent can feel overwhelming at times. It can seem like there are many competing priorities your money could be allocated to, but your wealth manager can help you to sort through what to focus on next – so you can focus on your children.

More to consider

If you’re the single parent of a minor, carefully consider:

• What will your child’s life look like if something were to happen to you?
• Would they live with a relative or ex-spouse?
• Would they stay within their school and community?
• What kind of limitations would they have when accessing their inheritance?