Single mom? Here’s how to manage expenses

Single mothers face multiple challenges, from financial strain to a lack of emotional support. Many don’t receive child maintenance, earn significantly less than their male counterparts, and struggle to plan for their financial future.

Approximately 48% of South African households are headed by single mothers, as estimated by non-profit organisation (NPO) Single Mums Initiatives, and for these homes, survival strategies are a must.

We provide valuable tips to help single moms manage their expenses more effectively. 

Tip: Having emergency savings can help you to cope better during financially-strained months. Find out more about how to save.

Prioritise needs over wants

Whether you’re receiving child maintenance or working with just one income, you’ll need a sound budget to get you through the month, notes Jean Archary, financial wellness coach and founder of Money Messages.

“Identify your needs and cut out wants until you’re able to afford them,” she says. “DStv, for example, is not a need - as much as some people think it is.

“Work out what you can afford rather than what you think you ought to have, even if your children are accustomed to a certain lifestyle. It’s not worth going into debt to try to maintain this.”

Archary, a single mother herself who runs money workshops for single mothers, recommends paying yourself first.

“Try to build up an emergency fund and a retirement plan, even though these may seem like luxuries on a tight budget,” she says. “Savings will always put you in a stronger financial position.”

Strategies to free up funds 

Single mother Vanessa Rogers says she intends to use her access bond facilities to pay her seven-year-old child’s school fees, which are R56,000 a year. 

Paying upfront ensures a discount – but the discount needs to be big enough to offset interest charges on the amount drawn, notes Kyle Wales, global portfolio manager at Flagship Asset Management.

“The current prime rate in South Africa, which is the interest rate relevant to most mortgages, is 11.75%. The discount would have to be greater than 6% (roughly half of the prime interest rate) to make it worthwhile,” he explains.

Lerato Steyn, who has four-year-old twins, plans to take advantage of new legislation allowing her to withdraw one-third of her retirement savings ahead of retirement.

“I want to use the funds to get rid of my R40,000 debt, and finish paying off our second-hand car, which will put me in a stronger financial position,” she says.

Wales says this makes sense when paying off unsecured debt where the interest rate exceeds 20%. “However, you should only go this route if you don’t start racking up debt all over again,” he warns.

Adele Barnard, senior financial planner and investment specialist at Sanlam, says many people will welcome the “two-pot system” in March next year, which will enable them to withdraw a portion of their retirement funds.

However, they will be heavily taxed, and few can afford to replace the funds for their retirement needs. “Always try to preserve retirement funds, unless you have no other option,” she cautions.

Tips for single moms

The following tips can free up funds or help you to save more.

• Downsize or downscale. Rent out your home, sub-let, or downsize to reduce your living expenses. You can offload excess furniture by selling or donating it.
• Save on transport by driving less, living closer to your child’s school or workplace, and running - or joining - a lift scheme. Some insurers offer discounted premiums if your mileage is below an annual limit. 
• Review your insurance annually. Obtain three different insurance quotes and compare like with like. 
• Review your health cover. Is your medical aid too expensive? Consider medical insurance or a primary healthcare plan.
• Scrutinise your bank statements and find expenses you can cut; for example, bank charges or subscriptions. Do you really need that R60-a-month Spotify account?
• Make full use of your tax-free allowance. Tax-free investments were introduced to help South Africans save more. Find out more about these inflation-beating products.
• Buy groceries in bulk. This may not work for you if having more means you’re inclined to eat or waste more – however, it can work for a larger household.
• Work around the “pink tax”. Women pay more for necessities such as PAP smears, contraception, and sanitary products. Loyalty cards can help – for example, you start earning 4% cashback on your Clicks ClubCard once you have spent R1,000 in a two-month cycle (you earn 2% up to R999). Buying some of these products in bulk can help you save.
• Educate yourself. Learn as much as possible about personal finance through websites, books, online courses, or YouTube videos. Knowledge is power when you apply it – as is understanding your rights.  

Tip: If you’re a single mother, debt can compromise your financial security to the detriment of your children’s future. Manage your debt by applying for debt consolidation.