Getting your Trinity Audio player ready...

Review this checklist to help make sure you’re on the right track.

Deciding how to allocate your income as a parent can be overwhelming—especially if you’re going it alone. Spending on essentials while saving for college, emergencies, and retirement is a challenge. That’s why we’ve put together this list of action items and considerations to help get you started on the right budgeting path and improve your financial health.

About 24 million children in the U.S. live in a single-parent household, according to Census data.

Set up a budget and recalibrate as necessary. There are many budgeting methods to consider, like a “zero-based” budget where every dollar spent has a purpose, or the 50/30/20 budget rule (That’s when you allocate 50% of your after-tax income to needs and obligations, 20% to savings and 30% to wants). Try a few of these methods and see which works best for you. The most important part of managing a new budget is to check in with yourself at regular intervals to adjust what’s not working for you.

Build up your emergency fund. Everyone’s emergency fund will add up differently, but experts recommend saving enough to cover 3 to 6 months of living expenses. The amount you need will depend on your critical monthly expenses, such as housing, food, healthcare, childcare and transportation. Focus on steady progress toward your goal, whether that’s contributing a set amount or a percentage each month, to keep your contributions sustainable.

Check your health insurance plan. A life event like a divorce or having a child enables you to make changes to your employer-sponsored health insurance plans without waiting for open enrollment. If you’re coparenting, have a conversation with the other parent to determine which one of your health insurance policies has more comprehensive or cost-effective coverage for the children. Especially if you’re concerned about childcare costs, explore a plan with a flexible spending account (FSA) option. This allows you to sock away up to $5,000 pre-tax to pay for daycare, preschool and summer camp for dependents age 12 and under. Consider maxing out your health savings account (HSA) as well, to help cover any out-of-pocket costs. (Bonus: HSA funds roll over every year and can even be used into retirement.)

Revisit your estate plan. Think about estate planning documents as future protection for your children in the case you’re no longer here. A will is the first of these documents. It will allow you to appoint a guardian for your children and dictate how your assets will be distributed after your passing. A living trust, or revocable trust, can also hold your assets until it’s time to distribute them according to your wishes. With this, you can give your children what you want them to have, when you want them to have it. You should also appoint a durable power of attorney to manage your financial affairs if you become unable to do so, and a healthcare power of attorney to make medical decisions for you.

Take advantage of relevant tax allowances. Typically, the parent who cares for the child the majority of the time is the one who can claim them as a dependent on their taxes. The 2023 federal child tax credit is worth up to $2,000 per child, and some states have additional child tax credits for which you may qualify. There’s also the child and dependent care credit, which allows you to claim childcare expenses for children age 12 and under (up to $3,000 for one child and $6,000 for two or more). In preparation for the upcoming tax year and to account for household changes to income and expenses, determine if you need to change your withholding elections.

Save for your kids’ future. One gift you can give your children is a solid start to adulthood in the form of a college savings. Commonly referred to as a “college fund,” a 529 plan is a tax-advantaged, state-sponsored savings plan used for educational expenses. Earnings in 529 plans are not subject to federal tax and in most cases state tax, as long as you use withdrawals for eligible education expenses, such as tuition and room and board (reach out to a tax professional to discuss the eligibility for your state). However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. It’s a great way to pass down wealth and share the value of education with your children. The earlier you can start one, the better; compound interest will add up. You can set up recurring monthly contributions or add funds to the account as a gift for birthdays or holidays.

Don’t forget yourself. It may not feel like a priority to save for your own future when your focus is on raising your children, but it’s still important to set aside funds for your retirement. Take advantage of tax-efficient accounts, like a 401(k) plan, by setting up regular contributions. Another plus, many employers match your contributions to these accounts up to a specified amount. Consider a Roth IRA as well, which is a tax-deferred account that you can reserve for retirement (or use for qualified education expenses for your children if need be).

Being a single parent can feel overwhelming at times. But finances shouldn’t have to add to the pressure. It can seem like there are many priorities your money should be allocated to, but an advisor can help you sort through what to focus on next – so you can focus on your children.

NEXT STEPS

If you’re a single parent, start by:

• Preparing an estate plan to communicate your wishes
• Revisiting your budget and building an emergency fund
• Setting aside savings for both your retirement and your children’s future

Sources: turbotax.intuit.com; thebalancemoney.com; lendingtree.com; investor.vanguard.com; hr.nih.gov; legalzoom.com; marca.com; investopedia.com; realsimple.com; cnn.com

Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. © 2023 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. 22-BDMKT-5849 8/23

Poitevint Financial, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.

Stephen “Phillip” Poitevint, Certified Financial Planner, is located at 908 Tallahassee Highway, Bainbridge, Georgia and can be contacted at (229) 246-7208 and 67A Town Center Drive, Huntsville, Alabama and can be contacted at (256) 203-8000 or www.raymondjames.com/poitevintfinancial/