Article written by Jackie Porter
These days there is no end to the daily flurry of negative news. Interest rates keep rising, as well as the cost of living. As people maneuver today’s economy, they can’t help but wonder: Should we be bracing ourselves for a recession? And if so, how can we prepare?
If you are a single parent learning to manage your finances on one income after a divorce, rebuilding your finances may feel out of reach. But remember, all is not lost! Read on for the top 5 tips to get your finances back on track as a single parent navigating a recession.
1. Steer Clear of Negative News:
Take a deep breath and remember recessions are not new. This would not be the first time a recession reared its ugly head, and it won’t be the last. The media tends to focus on doling out a daily diet of negative news. Why? Fear sells! While there have been indicators that a recession is on the horizon, that does not mean anyone knows for sure when it will happen or how long it will last. Even if we do experience a recession. being on high alert and panicking isn’t a solution. It won’t erase your worries about your specific financial circumstances. Instead focus what you can control.
2. Reduce Personal Expenses As Much As Possible:
If you are going into debt at the end of each month simply because you have not adjusted your expenses to align with only having one income to pay the bills, now is the time to have a money talk with yourself. Ask yourself, can you afford the lifestyle you have created after your divorce? Will you need to revisit your competing financial priorities that may include building an emergency cushion while providing your children with the comforts they took for granted during your marriage? Where will you need to cut back expenses to make ends meet? Write down all your expenses and take a hard look at where you can cut back. Create a new spending plan that includes keeping your finances in the black should you face an unexpected financial setback in the future.
3. When Interest Goes High, You Go Low:
Aim to consolidate double digit debt to the lowest interest rates you can find. That includes shopping around for low interest rates on your credit card and better terms for your loans and lines of credit. Also think carefully when taking on additional debt. Ask yourself, is it worth it? Have you factored in the taxes and other fees into the cost of financing? How stable is your financial situation and could you afford to pay for the cost of the good or service if you lost your job? Now is the time to reduce the interest costs that is leaking cash out of your pocket.
4. Take Advantage of Free Money to Fund Financial Priorities:
Many employers offer matching programs to fund your retirement. This can take the form of a RSP dollar-for-dollar match in contribution up to a certain percentage. It can also take the form of stock options or free shares based on length of service. Normally these options are offered to you at the beginning of your employment and outlined in your contract. So, if you didn’t take advantage of the free cash offered by your employer by signing up to these benefits, you may be missing out.
Maximizing contributions to registered programs also provide free money since RSP contributions offer cash back or reduce the taxes you would otherwise owe at tax time.
Taking advantage of cash back or points programs for money you spend on everyday items such as points cards for groceries or gas is also a great way to stretch your dollar further as well. Many companies will offer programs and will often provide bonus points when you sign up.
5. Be Intentional About Saving & Paying Off Debt:
As a single parent life can be busy. It’s easy to have saving on your to do list for longer than you planned. Before you know it, you have less time to save for some of the financial priorities keeping you awake at night such as retirement or paying for your children’s education.
Meet with a trusted advisor and set up automatic contributions so that you can fast track completing financial priorities on your to do list sooner! You should also set up autopayments for all your bills to avoid paying late fees and interest, and to ensure more of your hard earned funds are kept in your pocket.
Panicking about a potential recession may be a natural reaction, but remember this isn’t a solution. Regardless of what direction our economy is headed, follow these tips and prepare yourself for any financial emergency. Being a single parent is a tough job, but it also means you are capable of anything you set your mind to!