Single Parenthood: Planning Your Financial For Your Children’s Future And Yours

Being a parent comes with its unique challenges. The rise in single-parent households in India is a complex issue influenced by various socio-economic and cultural factors. Some of the reasons include societal, economic, and personal factors. In this blog, we will explore how some people become single parents, and what they can do financially to secure their child or children’s future. Furthermore, what can the single parent do to secure their future, especially as they approach their retirement age?

What Leads To Single Parenthood?

While some people consciously choose to be single parents as they legitimately afford to be single parents, many do not plan for such events in life. Here are some of the reasons that lead to single parenthood:

Societal factors

The traditional joint family structure is gradually giving way to nuclear families, leading to increased independence and decision-making power for individuals.
Delayed marriages and increasing age at first marriage are leading trends that are moving more towards delayed parenthood and increased chances of marital challenges.
While divorce rates are still lower than in many Western countries, divorce rates in India are increasing due to factors like changing expectations, incompatibility, and domestic violence.

Economic factors

Increasing educational and employment opportunities for women have empowered them to make independent choices, including leaving unhappy marriages.
Financial strains can lead to marital discord and ultimately separation or divorce.

Personal factors

A significant number of women become single parents due to domestic abuse.
Extramarital affairs and infidelity can disrupt marriages and lead to separation or divorce.
The death of a spouse can lead to single parenthood.
While not as prevalent in India compared to other countries, unwed motherhood does occur in India.
A growing number of people are opting for adoption, becoming single parents by choice.

It’s important to note that these factors often intersect, and the reasons for single parenthood can be multifaceted.

Securing Your Children’s Future And Your Retirement As A Single Parent

Being a single parent in India is a balancing act where you wear many hats – parent, breadwinner, and many times, the shoulder to cry on. But amidst the daily challenges, one crucial aspect can be ignored: financial planning for both your child’s future and your retirement.

Planning your child’s future

Create an emergency fund as your first line of defense. Aim to save at least six months’ worth of your living expenses to handle unexpected situations.

Start planning early and explore options like child education plans. Combined life insurance with a savings element, ensuring your child’s education is secured even if you are not around.

Accidents and illnesses can be financially draining. Comprehensive health insurance for both yourself and your children is crucial. Explore health insurance options to find a plan that fits your budget and needs.

Furthermore, a term life insurance policy can help secure your child’s financial lifeline in case of an unfortunate event.

Planning for your retirement

Retirement planning is essential so explore options like the Public Provident Fund (PPF), a government-backed scheme offering attractive returns and tax benefits. Consider the National Pension Scheme (NPS) for a more structured retirement corpus. Also, for potentially higher returns, you can look into Equity Linked Savings Schemes (ELSS), though these come with market risks.

Just like for your children, create an emergency fund for yourself as well.

Adequate health insurance will protect you from medical bills that can derail your retirement savings.

Explore a mix of equity and debt instruments based on your risk profile. A financial advisor can help you create a personalised investment strategy.

Remember that financial planning for a single parent requires discipline and smart choices. Make sure to review your plan regularly as your children grow older and your income changes. Reaching out to a financial consultant to help you plan your finances as a single parent will help you go a long way.