Investing as a Single Parent - FAQ

From balancing your financial situation to investing in your child's future, raising a little one on your own can be challenging, and you may have a lot of questions. In order to answer some of those concerns, SII has compiled several frequently asked questions below that many single parents pose, along with responses from our investment specialists. If you still find yourself with additional questions after you've browsed the FAQ section, please contact your SII affiliated financial representative.

As a single parent, what kind of a safety net should I consider?

At this point in your life, one of the most important steps in the financial planning process is setting up an emergency fund. This safety net should be used only in dire situations. In general, you should keep 6 to 9 months' worth of expenses in an account that is completely separate from others. This fund can come in the form of a savings or other low-risk investment account. Before you set up your own safety net, it's important to consult with a financial planning specialist so that they can work with you to craft a strategy that works for you and your family.

What should I re-evaluate at this point in my life?

It's crucial that you establish or re-evaluate a firm cash flow plan. You might have different forms of income coming in—Social Security, child support, insurance payments, alimony payments, etc.—and you need to look ahead. In many cases, these payments may end or be reduced, so you need to be prepared for any changes that may occur. Projecting your future income and setting up a financial planning strategy is a great way to better understand where you're headed. For more information on other financial investments to consider for single parents, please review our sample portfolio asset allocation chart and consult with one of our registered representatives. Overall, planning ahead for the future of you and your loved ones is essential.

What types of insurance should I think about?

With many different types of insurance coverage to choose from, it's important to consult with one of our representatives. Below are several of the insurance options that single parents should research:

  • Health insurance should be the first type of insurance you consider as a single parent. Without health insurance, medical costs can be extremely difficult to deal with on your own.
  • Life insurance: The policy you purchase will depend on the needs of your family and your individual finances and whether you want it to cover college costs, your home mortgage, etc.
  • Disability insurance: Without a second income from a spouse, this type of insurance can make a world of difference if you're ever unable to work.
  • Long-term care is meant to provide for your care in the event that daily activities such as bathing and dressing become increasingly difficult. If you have the funds, consider this type of comprehensive care coverage.

When contemplating your retirement investment options, it's important to consult with your independent financial advisor so you know and understand your options and the impact changes can have on your financial profile.

Should I be purchasing or renting a home?

Ultimately, the decision to purchase or rent your next home is entirely up to your unique financial situation. Before you make any major decisions, you should first consider utilizing a mortgage calculator to see what you can afford. Next, you should contact an investment professional who can look at your income and expenses to guide you toward a sound real estate and financial decision.

Should I prioritize saving for retirement or my child's education?

Often, we see single parents struggling to find a balance between investing in their own retirement and their child's college fund. In most situations, we recommend prioritizing your personal retirement savings. Your child may be able to get a loan, scholarship, or grant for higher education expenses; but your earning capacity will diminish over time. For some single parents, they're able to find a balance between the two important strategies; for others, they need to focus on just one. Monetary situations vary, so it's important to speak to your financial investment specialist for advice regarding your unique situation.

Should I be considering estate planning for my child?

To put it bluntly: Yes! At this stage in your life, it's essential to make arrangements for your child in case something happens to you. Establish a will, name a guardian that could take care of your child, and clarify finances for your child's future. It may also be useful to select a power of attorney, which will give someone the legal right to make decisions on your behalf. These processes will help ensure that your family is protected.

If you still have unanswered questions, or are interested in connecting with one of our specialists, please contact SII Investments today.