CHOOSING BETWEEN RETIREMENT AND COLLEGE SAVINGS
Paying for college can be daunting—especially if you’re a single parent. With average tuition costs at a four-year private college nearing $30,000 per year, having a plan is vital. No one is aware of these challenges more than Judy Gardner, a mother of two teenage sons: Cameron, 18, and Kevin, 14. Cameron is a freshman pre-engineering student at Washtenaw Community College in Ann Arbor, Michigan, and Kevin will start college in another three years. Gardner, a 46-year-old divorcée, is committed to providing a solid financial future for them and for herself. She is also committed to making sure they have a solid education.
Although Gardner hasn’t saved for their college tuition, opting instead to focus on her retirement savings, she has assisted with researching scholarships and grants. “I thought it would be wiser to save for retirement and look for loans for their education. I search online, talk to teachers regarding scholarships, and attend financial aid seminars to get information,” says Gardner.
If you’re a single mom working to prepare for college costs, here are a few tips:
Take inventory and set goals. Compare your income with your total expenses per month. Factor in the immediate needs and priorities of yourself and your children.
“Write your responses to the inventory in a grid or financial planning software,” says Sherry Bryant, CEO of Sherry Bryant & Associates, an accounting and business management firm. “This will help you see how much work needs to be done. Set written and attainable goals of where you want to be financially in one month, six months, one year, and two years,” says Bryant.
Build a safety net. Being a single mom with children makes it even more important for you to have a cash cushion in the event of an emergency. Develop a part-time business around a skill or hobby, secure a part-time job or work extra hours on your current job. Implement a savings plan for you and your family. It can be as little as $25 to $50 a month as long as it is consistent. Initially, this will be an emergency fund. Once you’ve built up a six-month reserve, the additional savings should go toward investing in retirement and college education.
“Discipline does not take away from the quality and enjoyment of life. It gives you self-reliance and freedom for you and your children,” says Susan Bradley, founder of the Sudden Money Institute.
Establish an education fund. After you’ve gotten a handle on retirement savings, sock away money in a 529 savings plan for tax-free education. In addition, like Gardner, make an effort to research available scholarships, grants, and other sources of financial aid. The book Getting Financial Aid 2010 (College Board; $21.95) is a good place to start.
Set financial priorities. Many pitfalls greet single moms. They include not properly accounting for expenses throughout the month, lack of savings, lack of goal setting, and putting children’s college financing before their own retirement. It is important to enlist the help of a financial planner or a friend or relative who manages finances well to hold you accountable.
Don’t neglect your health. Protect your health—you can’t work without it. Financial concerns and raising children alone can lead to depression. “Depression around money issues often causes single mothers to fall prey to emotional spending as a means of feeling better,” says Valerie Coleman Morris, personal finance expert. “Question your spending motives. Budget as if your life and your children’s depend on it—because it does.
—Leslie E. Royal
RESOURCES FOR SINGLE MOTHERS
FinAid (www.finaid.org) lists tools for college financing such as loan and scholarship information and a college cost calculator.
Single Mom Financial Help (www.singlemomfinancialhelp.com) gives tips on budgeting, money management, and credit and debt advice.
The Everything Guide to Personal Finance for Single Mothers by Susan Reynolds and Robert Bexton (Adams Media; $14.95) assists single mothers with setting financial goals, assessing financial health, and conquering debt.
A Woman’s Guide to Managing Money
This article originally appeared in the February 2010 issue of Black Enterprise magazine.