Managing Money as a Single Parent: 7 Essential Tips

Learn how to navigate your finances as a single parent, what benefits you might qualify for and how to set your children up for a bright financial future, too.

Budgeting, saving and planning for a family is complicated enough when you have the help of a partner. But if you’re one of the estimated 1.84 million single-parent families in Canada, managing your finances and raising kids alone can feel even more daunting.

Julia Chung knows the feeling all too well.

Chung was a teenage single mom who felt the sting of judgment and rejection as she raised her son on her own. The now-CEO of Spring Planning in Greater Vancouver recalls making tough choices and sacrifices early on to ensure she and her son would have a stable financial footing.

“I struggled quite a bit, but I made an active choice that what I’m doing now is for my future and his future,” says Chung, who is also president of the Financial Planning Association of Canada. “There are sacrifices that he made and I made so that we could get to a point where we could buy a house and those sorts of things.”

Whether you’re a new single parent or have been solo parenting for years, following these steps can help you take control of your money — and build a bright future for you and your children.

1. Look your financial situation in the eye

Gather your bank statements, pay stubs and any loan or credit card bills to assess your net income versus how much you owe each month, Chung says. Don’t forget to include child and/or spousal support payments. Unless you know how much is coming in (and what’s going out), you won’t be able to create a sustainable, realistic budget, Chung adds.

If you don’t have much of a credit history, consider opening a secured credit card or one with a low credit limit as soon as possible, says Drew Adamick, a certified financial planner and founder of Divergent Financial Planning in Lethbridge, Alberta. This will help you build your credit history and profile so you can qualify for future financing if you need to buy a home or get a new car on your own, he adds.

2. Update your estate plan, especially beneficiaries

After a split or divorce, you may need to change beneficiaries on your bank accounts, life insurance policies, RRSPs and other financial accounts, Adamick says. People often forget to update beneficiaries after a major life change, which can lead to uncomfortable situations later on.

You should also update your estate plan (or create one if you haven’t already), Adamick adds. Your estate plan should include a will and executor, designated guardians for your children, advanced medical directives and both a medical and financial power of attorney.

It’s also a good idea to update your online passwords for any accounts that are in your name only. If you had joint accounts, loans or a mortgage acquired during the marriage, those assets and liabilities are often divided up equally unless you have a legal agreement stating otherwise. If you don’t have an account in your name yet, open one as soon as possible so you can start using it to pay bills and deposit paycheques.

3. Sign up for any benefits you may qualify for

You may be eligible for certain government benefits as a single parent, especially if you have a modest income. Chung advises taking advantage of all the benefits you can because they’re meant to be a safety net.

“Absolutely no shame; do it,” Chung says. “But, also, make a plan. You did nothing wrong, but you’re the only person who’s going to get yourself out [of the situation] — and you can, even if it’s insanely hard.”

Here are some of the key government benefits to consider:

Canada Child Benefit: This tax-free monthly payment made to parents who have primary childcaring and upbringing responsibility for minor children under age 18.
Child disability benefit: This benefit helps families care for disabled children under age 18 who are eligible for the disability tax credit.
Canada workers benefit: If you have a low income or you’re re-entering the workforce, this refundable tax credit can provide some tax relief for eligible working individuals or families.
Canada caregiver credit: This tax credit provides financial support for caregivers of a child with a physical or mental impairment.
Provincial and territorial programs: Depending on where you live, your province or territory may have supplemental programs to help with child caring and upbringing costs.

4. Spend money on the right things

As a single parent, your money may not stretch as far as it did in a two-income household or if your former spouse had a significantly higher income. You may have to make tough decisions with your children about what you can and can’t afford in your new reality, Adamick says.

Make a list of your needs versus wants; needs are things like housing, shelter, food, utilities and childcare and health care. Wants might include dining out, new school clothes, entertainment, vacations or activities your child participates in.

If you have enough money leftover after allocating enough money to needs, order the items on your family’s “wants” list by priority.

5. Use a budget to stay on track

A budget can be a financial roadmap for your family’s future. You can use free budgeting tools or apps, or use a simple spreadsheet. But knowing your income sources, categorizing expenses (fixed versus variable, needs versus wants) and tracking your spending are essential to successfully take control over your financial future, both Chung and Adamick say.

Also, don’t forget to put money towards your own retirement savings, such as an RRSP. If you can, contribute to a tax-free savings account to build your emergency savings fund as well as a Registered Education Savings Plan (RESP) to save for your children’s academic future.

6. Talk to your kids about money

Empower your children to become financially savvy by having open, transparent conversations early on about money, Adamick says. In addition to helping them understand the basics of budgeting, spending and saving, consider opening a kids bank account or a student credit card.

Adamick suggests starting teenagers with student credit cards in their own name with a low credit limit, say, $500. This gives your teen a credit-building experience with less risk than adding them to your account. He also advises caution when co-signing any loans as your older children leave the nest. If they fall behind on payments, it can damage your credit and put you on the hook for repayment, Adamick says.

7. Get free financial help

If you’re overwhelmed by the idea of managing your finances alone and need guidance, the Financial Planning Association of Canada offers pro bono financial consulting services to put you on the right track. Single-parent nonprofits such as One Parent also offer financial resources and help.