April 8, 2008
This is part of our Financial Literacy Month Question and Answer series

Question: What advice can you give recently divorced women on how to manage their finances now that they are facing life as a single mom on a limited income? What should be their first priority? Lisa A. Fredette ~ CTA Certified Life Coach ~ Passionate About Life Coaching ~ http://www.lisafredette.com

Answer: Hi Lisa, that’s a really great question and I’m sure most newly divorced single moms are wondering the same thing. I could write a book about that!

Seriously, there are several things you’ll need to do to manage your finances now - some “outer” and some “inner”.

1. Live below your means. That means creating a spending plan that takes future expenses into consideration including car repairs, home repairs and medical expenses. I recommend www.INGDirect.com for keeping that money.

2. Take advantage of any government programs you are eligible for such as food stamps or free/reduced meals for your children. You may also be eligible for Earned Income Credit - check with your Tax Preparer (H&R Block doesn’t charge you to do estimates).

3. Review your employer’s benefit programs such as 401k (the match is free money and your contributions reduce your income taxes), health savings accounts (also reduce your taxes). Also check to see that you don’t have too much being taken out of your paycheck for taxes. It’s always nice to get a tax refund but it’s been your money all along and you lend it to the government interest free all year.

1. Take time to play. Play with your kids, play with your friends and take time for yourself. Kids don’t need you to spend money on them, they would rather play make-believe or bake cookies with you. When my kids were little, we used to have “no silverware dinner” - ribs or chicken nuggets, oven fries, veggie sticks or artichokes (”Mom, who do you think invented artichokes,” they would ask). They’re teenagers now and they still get a kick out of seeing only plates and napkins on the table. Get together with other single moms for a potluck or picnic at the park or movie night - you don’t have to go out to have fun. Do a babysitting swap so you can have time for yourself - just to read, take a walk or a bubble bath.

2. Express Gratitude Daily. Even though times are tough, it will get better. Expressing gratitude can keep life bright for you. It’s a great tool to teach your children, too. Practice giving back - help them weed for an elderly neighbor or pick up a few groceries for someone who’s housebound. Work together at a food bank or a Habitat for Humanity project.

3. Talk to kids about money. Teach them how to figure out unit costs and sale prices. Teach them how to make choices. Teach them about saving for things they want in the near future and far away like college. When they ask for something, ask them “how can we make that happen?” rather than “we can’t afford that”. Offer to match money they’ve saved or help them make money. Give them an allowance appropriate to their age and transfer responsibility to them. For example, make the entertainment money you hand them out of pocket part of their allowance and the same for clothing. An allowance doesn’t have to mean that you are giving them any more money than you are already spending on them but that you let them decide how to spend it. They’ll stop “nickel and diming” you and you’ll be surprised at the choices them make when it’s their money rather than yours!

Author's Bio: 

Cindy Morus is a Certified Financial Recovery Counselor. Cindy is a leading authority in showing women and their families how to achieve financial well-being and peace of mind