Cheryl Roberts has had her fair share of financial hardship. After graduating from Illinois State University in 1986, she spent five years in sales with consumer-brand giants Johnson & Johnson, Scott Paper Co., and Kimberly-Clark. Then she was laid off from work. Up until then, she didn’t have any debts; her parents had paid for her college education and she had always driven a company car. But after losing her job, the Chicago native lived off of personal savings for nearly a year before landing employment as a secretary at a local radio station earning less than $21,000.
A year later, she was working as a sales rep for another radio station. “That’s when I started making money again, first it was around the $40s. When I left, I was earning around $70,000,” says Roberts. During this time, her first goal was to be debt-free. “I had about $6,000 in credit card debt plus a car loan. My second goal was to start contributing to my 401(k) at work,” she explains. Third, she wanted to save money–about $13,000, which added up to a year’s worth of monthly living expenses.
She experienced another dramatic change six years ago when she learned she had a medical condition that affected the lining of her uterus. Her doctor suggested that childbirth could prove helpful. But it wasn’t until recently, that Roberts, now 37, was ready for motherhood. Last fall she gave birth to Christian; just two weeks after purchasing her first home, a three-bedroom townhouse in Chicago.
Roberts knows just how important it is to manage the financial challenges of being a single parent. On the one hand, it is important to meet your parental obligations and save money for your children’s future. On the other, you must save to support yourself.
“There has to be a balance,” says Jonathan Sard, a certified financial planner with Financial Alternatives Inc. in Atlanta. “Single parents must develop the discipline of setting aside discretionary money in an education fund and retirement account as well as a cash reserve [for emergencies].”
EARMARK MONEY FOR YOUR CHILD’S EDUCATION
Tuition bills are just around the corner for Rebecca Wills, a 55-year-old physician with the health services department at California State University in Long Beach. Wills has about $10,000 saved in a gift trust for her 14-year-old son’s college education. “I need to be prepared to have about $15,000 a year,” she says, anticipating that Justin will attend a four-year college out of state to pursue his dream of becoming an architect.
Wills was age 43 when she decided to adopt her son, who was 31/2 years old at the time. While she has about $250,000 saved in a 403(b) at work and $10,000 set aside in an IRA, she doesn’t want to have to tap into her retirement account when the time comes to send Justin to school. Wills also has outside investments, mostly stock mutual funds and time-share properties. But more than likely, she will have to make up the shortfall from her income, which