Breaking Down The Net/Max Parent+ Financial Plan Step-by-Step

Of the 11 million families with children under age 18, and no spouse present, the majority are single mothers (8.5 million). Single fathers compose the remaining 2.5 million single-parent families. As such, it is only fitting that I draft a Net/Max Financial Plan for Single Parents. Moving the community forward wouldn’t work without supporting the strongest pillars. This is a road map; and, a Thank You for a job well done (before, during, and long after).

For those brand new to this thread, here’s a fast track on reading material that you will need to LEVEL UP; the future Pulitzer Net/Max Financial Plan for Singles, The Magic Number for Mill i on dollar Millennials, and When You are Your Parent’s Retirement Plan.

From 2014 to 2017, I went from $-110k to $100k in Net Worth. I went from making $0 to $100k in 5 years. I learned a few things through the valley. Lawrence Gonzalez, CFE

Table of Contents

WHAT DOES A NET/MAX FINANCIAL PLAN (FOR SINGLE PARENTS) LOOK LIKE?

Net/Max, What!? Most Certified Financial planners will hint toward extremes. Either pay down all your debts, Leverage everything for investment, Buy-buy-buy Real Estate, Be an entrepreneur, and the list goes on. I’m not saying any of those (in particular). I’m merely walking with you in your shoes and teaching you how to jog so you can eventually run.

For me, it’s not about paying down everything or saving it all; it’s your own personal blend. As you evolve, tweak your path. These are the FUNDAMENTALS!

“Don’t believe you have to be 100% solvent right away; create a mix that works to move you forward (and keeps you sane) We all start somewhere.” Christina Michaud, IMBA

“What do you know, Lawrence? You don’t even have kids!”

True. But- I do have a mom. My family fell into the vicious generational cycle. I watched my mom, aunts, and cousins struggle through it. You are as tough as nails, manage it all. You are still human. I promise your kids will see the cracks in your armor and just like them; I’m here to say you are not alone.

Read through this; if you can’t use it, no harm is done. However, if you can use any of it; the community benefits, and so do your kids from your example.

1. Know your Net Worth

Assess the fortress aka the home. Take note of any problem areas, community resources, work benefits, and even friends (you never know who is your Go-To person in an emergency). My little cousin surprised me as a young mother of two; she moved to another city and used the available county resources to become a 1st-time homeowner by 24 and a rental property owner by 25 on a salary of about $32k (before taxes). It can be done. Be open to considering alternative paths to success.

Before you get there, you will need to Understand Your Numbers. Check out Free Financial Apps like MINT, and/or PERSONAL CAPITAL.

2. Develop a Family Budget

Family money management isn’t too different from managing a budget as a single person until you realize that kids are expensive. Average costs to raise each child into adulthood range from about $10,000-$15,000 annually. That’s basically a quarter million. EACH. If you did the math and invested that amount for 20 years, you would be a millionaire. I digress…

What are your expenses? Do you need to rethink your spending strategy? (Throwing money at issues every week isn’t the path to peace and nirvana). Kids are expensive. So, you need a family budget to ensure you can maintain financial stability as you raise your kids.

A regimented program can keep the kids in check, on the right trajectory, and your mindless stressed. When you have bills in the background, it’s easy to fall into unhealthy habits that avoid looking at your financial stress, and these habits can make it worse! Activities i.e. sports, dancing, or even coding can be great and inexpensive activities, with planning.

“This is prescriptive but your family budget can include childcare, growing children’s clothing, food costs, diapers, extracurricular activities, family vacations. Planning equals more fun for the family.” Rhodena Mesadieu, LCSW, Entrepreneur, and Owner of Restore Wellness Counseling Center.

3. Tame the Week

Out of control home typically leads to an out of control kid. “Many parents feel like their kids are out of control at one time or another. For some parents, out of control kids have become the norm. Their children refuse to listen, break the rules, and couldn’t care less about consequences.” So let’s regain control of our lives.

“Believe it or not, kids like rules and limits. Kids feel safe when they trust their parents are good leaders who can set and enforce rules.” ⇢ in the same sense, we also need structure as adults.

A regimented time management scheme opens more time for productivity and family. Try Laundry Day(s) for no more than 2 times a week, Meal Prep(s) for breakfast and lunch while dinner can be a variety of Sunday leftovers or light simple 3-4 ingredient dishes. Taking a cue from the Marines, create one MEGA Cleaning Day where everyone gets involved. Family Day on Friday or Saturday. And keep it mellow, Sunday for Learning, Meditation, or Spiritual Day. Try not to go overboard.

Setting a schedule and a routine for everything as important as balancing your checkbook or meal prepping can create positive financial habits. And it also creates a structure for your family that keeps you from straying to unexpected expenses like meals out, buying items you don’t need, and paying for clothes, toys, and technology.

It’s just as important as a parent that you make time to engage with your child. You should also make time for yourself. In your budget include an allocation towards activities or small indulgences. Planning for the expense in your budget makes it so you are not restricting yourself, but not overspending either.

4. Save $2k in an Emergency Savings Fund (Adjust As Needed).

Ally Bank has 2.20%, Chase Premier Checking is currently offering a bonus of $300 as of 3.2019.

The huge benefit of having an emergency account?

Not putting your random emergency expense on a credit card! The plan is to get OUT of debt, not into more of it. You will enjoy peace of mind, and as a bonus you can have your money make MORE money!

5. Every App, Every Reward.

Apps like Acorn, Stash, Robinhood are a great way to automate your active spending into residual savings. Be sure to not run your account too close if you’re using round-up apps; they can easily overdraft you if you don’t plan in a buffer.

“In terms of the investment platforms and the companies you use, you must always do your homework,” says Rachel Rabinovich, director of financial planning at Society of Grownups, which offers Advising services and courses for young investors.

6. Mix in your Healthy Hobbies and Goals.

Foster better 1. Mental, 2. Spiritual, 3. Physical, 4. Social Health, and 5. Family Cohesion.

Remember that even taking 10 minutes a day to meditate, sharing a single meal, taking the stairs, or praying before bed can have a significant impact on your life. Struggling to find time for yourself? Can’t afford a sitter? Join a single parents group and share babysitting duties. That’s a great (FREE) way to get out, and the kids get a playdate as a bonus.

7. Auto-pay toward success.

Focus on paying down Debt naturally and become Solvent. Credit Cards (CC) tend to range avg. 17%+ Interest Rate. *CC Strategy -> Pay off 3 months. Don’t do the hard inquiries. Request Credit limit Increases (Periodically) and/or Lower variable interest rates.

Use CreditKarma.com. Payoff student loans normally. Avg. low-interest rate of 6% or less. Research repayment programs like the Public Service Loan Forgiveness. Pay up to $2.5k in Student Loan interest fee (annually) for the Tax Credit.

Be sure to plan for variable expenses like heat, or bills which may not be a set amount. Keep a buffer in your budget and don’t look at it as extra funds. You could also automate your recurring payments to be more in control of your money. An additional advantage you can gain by making timely payments is an improved credit score.

“If I have a free babysitter every week and I was spending $50 to pay. Maybe that is an extra $50 to pay down credit cards or add to a savings plan. Or creating a savings plan for the child.” Rhodena Mesadieu

Bonus Resource: 50 Personal Finance Habits Everyone Should Follow

8. Match 401K, 457 Plan, 403B savings rate at work, if possible.

You can save up to $19k/year. It lowers your taxable income so you get more money back. Use that money to pay down debt (1st). It provides comfortable growth and emotional security.

And it also sets you up long term for retirement down the road.” Lawrence Gonzalez, CFE

9. Buy a Condo/Starter Home.

Think of it as a temporary spot, it doesn’t have to be the dream home. No more than 30% of your take-home should go to housing expenses and 1% for annual maintenance fees.

*Buy 3/2 – Room for Grandparents (if possible, great for babysitting). Look into 1st-time homeowner resources and benefits.

Great for starter homes. First-time home buyers program.

Go to a family mortgage specialist. They are usually aware of the first time home buyer program in your local area. Urban League is also helpful which is a national organization. County and city offer grants as well. Go to their website for information.

10. Pay up to $7k annually in a Health Savings Account (HSA)

Lowers taxes per pay period so you get more money back. Great for Medical/Dental expenses. Great in your 20s. Useful in your late 30s. Also a great back up for your child’s random unplanned emergency room visit. But be sure to use it in the right time frame.

*Families who frequent the doctor’s office may find that an HSA is not the best choice. … But for those in relatively good health who are financially able to pay out of pocket for the few times, they visit the doctor — thereby letting their HSA balance grow — an HSA can be a no-brainer. You might want to look into Flexible Spending Accounts as well.

11. Work towards 3 Months of Expenses in High-Interest Savings (Adjust gradually).

Bankrate seems to be the one-stop-shop to seeing which rates are best.

12. Buy QUALITY over Quantity as you go.

Great quality, classic items hold their value and lessens wear and tear. Great longevity. There’s a reason for the big minimalism movement.

Capsule wardrobes lessen your expenses and also help your house stay neater and provide less work. Conspicuous consumption (the desire to buy and have new things because our friends/coworkers/acquaintances do) has done nothing but sink generations into debt- that you don’t need. Buy quality when you can and keep it as long as you can.

HOW-TO BUILD A CAPSULE WARDROBE: tips from a stylist

13. Save for your Children’s college education using tax-favored plans.

Better yet, buy investment property near their ideal college town as they age. Short/Long term income. Look into options in your state for matching grants for contributions. Ask for payments to college funds instead of stuff for special occasions. It will hold value longer term.

14. Put up to $6k in Traditional/ROTH IRA (As Needed).

You can throw up to $6k annually in either or even have a combo but you can’t cross $6k.

15. Invest in Stocks.

*Keywords: Diversify the Portfolio, Buy in bulk. Stable and Steady.

A well-balanced portfolio contains diverse investments. As you get closer to needing the money, you should adjust your portfolio to reduce your risk. For example, if you have a child in college and you have money set aside for them in stocks, then you want to start moving that money into cash or safer bonds, as they get closer to graduation. If not, then there could be a huge downswing in the market that would result in the loss of or reduction of your investment and you won’t have the time to make up the money.

16. Build Wealth – write a blog, do a vlog, do public speaking, write a book, Podcast.

Have fun and leave a Legacy. Enjoy the process. You will be able to travel, see concerts and etc… And have multiple streams of income doing it. What better way to make money, than when you’re either doing what you love or doing nothing but sitting back to watch it grow? Support others by sharing your journey and encouraging them on the path to success.

**”There could be something in there that mentions professional goals advancement because that can cost money as well i.e licensure, certificates, additional training. But also can create more income in the future. Staying at the same job for a long period of time or position can you cost you $10k a year.” Rhodena Mesadieu, LCSW

Final note. “I would like to Thank Christina Michaud and Rhodena Mesadieu for their insights and assistance. I look forward to working with them again and others as we create solution-driven content. We all have our why…” Lawrence Gonzalez, CFE