How Can A Single Mom Ensure Her Financial Independence

Living a life without a purpose is frustrating. Purpose lets you live for something, and in its absence, life loses meaning. But a bigger tragedy is that of a single mom who fails to secure her financial independence.

Women are the builders of their homes. Death and separation/divorce renders a woman single, and one small financial mistake can ruin their lives forever. They need a lot of financial wisdom to secure their future. If you are a single mom, read on to find out what you should do to remain financially independent.

What Is Financial Independence?

Financial independence is whereby your investments bring in more money than your expenses. There is enough money to foot life expenses from your passive income. This means you do not have to rely on the primary source of income to live your life. Passive income gives you an early retirement.

Take the case of a single mom with monthly expenses of $1,500. But she makes 25 times more than this from her secondary sources of income; she is already independent financially. She can rest easy because her investments earn her more money than her monthly expenses.

How Much Money Do You Need To Be Financially Independent?

The amount of money you need to be financially independent should be more than your expenses. For example, if your monthly expenses total $10,000 and your investments generate more than $250,000, you are financially independent. The general rule of thumb on matters of financial independence is saving 25 times your annual expenses. This is how you know that you have attained autonomy and can retire early.

How Can A Single Mother Manage Money?

You have reviewed your expenses, cut on your budget, saved, and now it is time to invest. It is not an easy affair because it carries so much risk. It would help if you were sure that it is the right investment decision you are making. And the Infinite Income method is the most popular route to take care of all investments risk. A client – a potential investor in this case – is guided in the best opportunities to invest in. The model has many success stories, with many women earning from investment plans created through this. A single mom can tap on this fountain to create a sound investment plan.

How do Single Moms become Financially Independent?

For starters, there are no shortcuts to financial independence. Let this be a guiding factor for single moms. Also, prepare for a long journey with temptations of all kinds – you can overcome them. That said, a single mom needs to do the following to bid goodbye to monetary fears.

Sit Down And Examine Your Finances

It starts here. The financial examination assesses how much you earn and how much goes into expenses. Creating an expense tracking plan is recommend moving forward. Also, create a budget and stick to it religiously.

Clear All Debts

For a single mother to enjoy financial freedom, debts must be out of her way. Work more to settle outstanding consumer debts such as student, credit card, and car loans. You can even check for loans for people on benefits for help.

Cut On Your Spending

You have a goal and a timeline to hit financial independence. It calls for radical surgery into your spending. Reduce expenses as much as you can to increase savings. It would be best if you started with bad spending habits such as impulse buying. Ditch that credit card and pay cash to avoid debts. Make purchases online or where prices are discounted.

Get Side Hustles

Side hustles may sound like a terrible idea, but they can get you to places. Income from side jobs boosts your total annual income meaning your savings also increase. If you are stuck in getting a side job, ask yourself what hobbies you are good at. They can make you money in your free time. Look at your skills and see if they can earn you more money on the side. Lastly, listen to what your friends say you are good at; it could be driving or bonding with dogs. Another way of earning more is by asking for a raise at your current job. Getting another job with higher pay can increase savings.

Apply 80% Rule For Savings

Time waits for no man; saving 80% of your income helps beat the set deadline. Setting 80% of your income for savings sounds draconian. But being frugal or mean to yourself is a big sacrifice whose reward is more savings. It is tenable! All you need is to keep your eyes fixed on the prize.

Invest Wisely

Investing can create a new revenue stream with more returns than your primary source of income. However, it is as risky as not saving for your future. You must conduct in-depth and proper research on what you want to invest in lest you burn it all. Good market research will open your eyes to potential areas of investment. Some of the investment options to consider are real estate, money market, stocks and dividends. You can try by yourself, with a stock tracker, for example, or you can go safe and hire a financial advisor

What Is The Four Percent Rule?

The 4% rule is the most popular when setting financial independence goals. It is used in calculating the amount of savings a retiree generates from annual expenses. Trinity University used the percentage, a study guiding retirees on how much to withdraw and still maintain an account balance. It is otherwise known as the safe withdrawal rate.

In applying the 4% rule, calculate annual expenses and multiply the figure by the number of years you want to retire. The results guide you on the percentage of savings to withdraw. However, the number of years a retiree lives determines if or not the 4% rate works or not.

A single mom with financial independence can transform her life, and that of her loved ones. She is the ship’s captain and makes sound decisions regarding the future of her family without worrying about money. Most single mothers reel in incessant thoughts, worrying about the tomorrow. But this can be avoided through making cohesive plans to keep the money flowing in even after endless; it is doable!