Bulletproof your way to a better life with your kids

When you think of the word family, what is the image that comes to mind? A man and a woman smiling widely as they swing a cherubic toddler between them? Rarely do we think of a woman and a woman, or a man and a man, playing with their kids or posing with a pair of shih tzus. And even rarer do we imagine single-parent households to be as happy and thriving as their counterparts. It’s because we hardly ever think of becoming a single parent by choice — rather it happens to us by a devastating accident of fate or a messy separation. Unless of course, you’re breathing rarefied air as the likes of Sushmita Sen, who chose to adopt her daughters as a single parent. (If you haven’t caught up on Twinkle Khanna’s internet-shattering interview with Sen, catch it here.)

Even though we don’t think of single-parent households as common, a 2019-2020 report by the UN outlines that the number of single mothers is rising exponentially, approximating 4.5% (13 million) of Indian households. Around 32 million single mothers live with their extended families. Amidst the variety of stressors, the most debilitating can be financial problems faced by single moms.

Meggha Vohra, 37, says a lot of single mothers in her social group were reluctant to separate from their partners because of financial constraints and the lack of a well-paying job. Her observation is supported by a study from UBS Global Wealth Management, which found that 58% of women leave financial decisions up to their male partners. So when that partner is gone, their financial problems multiply like pigeons in an attic.

According to single mother and author Sujata Parashar, “single mothers have it worse, as not only do they have to face multiple responsibilities but also lack social and financial support.” There are hardly any government-backed policies or funds directed toward helping single mothers with their finances. They’re paying taxes, and interests on their loans and EMIs, while also bearing the social ostracisation that can come with a marriage breaking down.

Smart financial planning can help lighten the load faced by single moms, so that you can give your children and yourself the lifestyle you deserve.

9 financial problems faced by single moms and how to solve them

‘I’ve never managed my own finances. I don’t know where to start.’

Tanvi Oza, a single mother who works in HR now, had never even opened a bank account before she separated from her former partner. “There were so many things I didn’t know. How do bank accounts work? How am I going to pay for my child’s fees? How am I going to run the house when I’ve never worked before?”

Before you start planning, understand how money works and where you should be putting it. You can take free financial literary courses on websites like Udemy and Clever Girl Finance. This personal finance course on Udemy is a good place to start.

If you prefer face-to-face interaction, the National Centre for Financial Education runs a Financial Education Programme for Adults (FEPA) that you can attend in your city. You can select the month and see all the planned classes during that time period. You can also request them to hold a FEPA class in your city if there isn’t one.

‘Is there a way to calculate how much money I should be getting for child support?’

Even if you’re working, if there is a substantial difference in income between your own and that of your former partner, you are liable to get alimony. “When you’re trying to gauge how much that should be, take practical elements into account such as inflation, which will directly affect your financial well-being,” says Jasmin Gupta, co-founder and CEO of LXME, a financial platform for Indian women. We suggest using the Alimony Calculator website by DSP Investment Managers to ensure you’re covering all your bases.

Child support is separate from the alimony you should be getting in the divorce. According to Aparna Mundani, portfolio manager at PeakAlpha Investment Services, single mothers should approach a financial planner for help in “quoting a number that takes into account your inheritance, income, medical expenses and insurance to things as small as groceries and gifting expenses, and child support.”

She also suggests collecting the alimony and child support proceeds as a lump sum. “When the support is paid in tranches, you stand the risk of the ex-spouse passing away and the money no longer coming in.”

‘Do I have any financial rights as a single mother?’

Kiran A*, a 39-year-old single mother who works in advertising, was told to leave her job when her boss found out she was pregnant. “I was already having marital problems and I wasn’t even aware that no company could legally ask me to leave while I was pregnant.”

According to the Maternity Benefit Act of India, women are entitled to be paid their full wages during their maternity leave period. The law states that you are allowed to take a maternity leave of 26 weeks. However, the woman needs to have worked for the employer for at least 80 days in the 12 months preceding the date of her expected delivery. Out of the 26 weeks, you could opt to take eight weeks leave before delivery.

Depending on the nature of your work and your employer’s consent, you can also choose to work from home. The law is applicable to women employed on an agency or a contract basis. A new amendment makes it mandatory for employers to educate women about the maternity benefits available to them at the time of their appointment.

Ojasvee Kapoor, a 34-year-old single mother, who was also brought up by a single mother, recounts when her father died, many creditors came to collect their dues. In such cases, the creditors may claim your husband’s life insurance payout as payment. You can check if your husband applied for his life insurance under the Married Women’s Property Act (MWPA). The act ensures that in the case of the husband’s death, the life insurance proceeds will only go to the wife, and cannot be claimed by creditors etc. If a LI policy is not applied under MWPA, then creditors can attach policies to recover loans.

‘How can I pay for my child’s education if I don’t have child support?’

According to a report by Business Standard, “Parents in India spend an average of about ₹12.22 lakh towards their child’s education, from primary school up to undergraduate level, much lower than the global average of USD 44,221 (₹33 lakh). This total is much higher than the average income of an Indian household, and even higher when it comes to single-income households. If you don’t have child support, this problem can exacerbate pretty quickly.

Gupta suggests investing in a child education portfolio that covers current and future needs. If you’re concerned about not having enough money, you can also apply for grants and scholarships under your child’s name. Kapoor started a Sukanya Samriddhi Yojana for her daughter when she was just 6 months old. Under this, single mothers can open a bank account for a girl child below the age of 10 years. As a parent/legal guardian, they can deposit up to ₹1,50,000 and earn a fixed return of 8.5% until the child is 21 years old. Both the interest and maturity amounts are tax-free.

You can also avail of the CBSE Udaan Scheme, which is specifically for girls studying in high school who are interested in STEM. There are several state-specific schemes that you can apply for, like Maharashtra’s Majhi Kanya Bhagyashree Scheme, Rajasthan’s Mukhyamantri Rajshri Yojana, and Bihar’s Mukhyamantri Kanya Suraksha Yojana.

‘Childcare is so expensive and I don’t have the funds for it. What do I do?’

Among the various financial problems faced by single moms, access to dependable childcare is a top-billed priority.

A possible solution can be working from home. While you are on maternity leave, you have the option to work from home. The Maternity Benefit Act also dictates that companies with over 50 employees must have a creche on their premises for single mothers to be close to their children as they work.

You can also involve a family member or your parents in caring for your child when you’re at work. Even if you are inclined to pay them for their service, it won’t be nearly as expensive as professional care would be.

You could also try creating a group with other moms where you take over babysitting duties for each other on rotation.

‘How can I do long-term financial planning if I don’t earn as much?’

Carving investment finds out of your limited income is one of the major problems in single-income households. With most of the money spent on essentials, saving for a rainy day can be difficult. In these cases, get rid of your debt first, says Dipika Jaikishan, co-founder of Basis, a platform that champions financial independence for women. “If you can’t afford to invest, then you definitely won’t be able to afford EMIs. Don’t build liabilities, if you can’t build assets.”

Mundani agrees, “Taking on debt at this stage can run you into serious trouble.” Adding that you should start small with budgeting, she says, “Categorise your budget. Analyse what you mandatorily have to spend on and what are your additional expenses, and then figure out how to cut down on those additional expenses. Slowly make your way up to investment.” When it comes to insurance, she advises prioritising health insurance above all.

Some companies pay for your insurance in part or full, so consult your HR before buying health or life insurance policies.

“When it comes to health or life insurance, it doesn’t have to be a Rs 1 crore policy, it can also be an affordable cover. Something is always better than nothing,” says Jaikishan.

Mundani stresses the importance of having your life insured if the child is solely dependent on you for their needs. “Even if you’re not currently earning, it makes sense to have a life insurance policy in place as soon as you are.”

When talking with other mothers in her single mothers’ support group, Oza found that many of them were concerned about long-term financial planning. “Because I didn’t have much financial knowledge, I just started making yearly recurring deposits for any of my long-term needs, whether it was my child’s education or a vacation.”

Similarly, Kapoor would also set aside her money in yearly fixed deposits as soon as she had liquidity of Rs 50,000. When considering the financial problems faced by single moms, Mundani agrees with the practice of having rainy day funds, adding that you must be mindful of what they can be used for. “Once you’ve set those categories, think of them as written in stone.”

‘I feel guilty when I’m spending money on my needs’

Arya, a 36-year-old single mother and HR professional, felt what she calls ‘mom guilt’ when she started looking for a daycare for her son.

According to a survey by LXME, only 12% of women want to invest in goals like retirement. They were willing to overlook their own needs for the sake of their children. Gupta strongly advises against it. “Don’t let go of your retirement planning because of your child’s education.” There are many resources like the Sukanya Yojana, which Kapoor invested in, that can help you bridge the gap.

Jaikishan agrees. “It’s usually how women function as well.” She advises working with a financial advisor as they will encourage you to look at your own needs as well. “Whether it’s retirement, or taking a solo trip, or upskilling because things are changing really fast and you want to be the absolute best.”

Think of yourself as an asset you’re investing in. You can also join support groups for single mothers to meet others who may be in a similar situation as yours. This can work wonders for your self-worth.

‘All of my money goes into paying for essentials or is kept aside in rainy day funds. How can I treat my children?’

Kiran A has limited cash flow so all of her money either goes towards buying essentials or her savings, which leaves her with almost no money to entertain her son. “He’s almost 10, so we either cook together or dance in the rain when we want to do fun things.”

When it comes to enjoying play-time with your kids, look for budget-friendly or free things to do. Don’t let your lack of funds interrupt your time with your kids because that will only teach them that they need money to be happy.

For younger children, you can look into renting toys and storybooks instead of buying them. Platforms like Khilonewala supply their rented goods to the entire country.

‘I don’t want to tell my children about my financial situation but that often leads to overspending. Is there a way to solve this?’

Knowing the financial problems faced by single moms first-hand, Arya has been transparent with her son. “He knows that we should spend wisely or that it is important to save because mummy is working hard for us.”

Once your kids are old enough to comprehend, it’s crucial to let them know about your financial situation if you’re a single parent. They will get basic financial literacy as a result, and they will also be better prepared for crises.

Mundani recommends bringing your children on board while budgeting for the month as it will also make sure you have a “financially savvy child.”

Vohra’s 12-year-old daughter started her own home business during the lockdown and although Vohra was the one to put in the capital money, she encouraged her daughter to make ends meet on her own. “I’ve made our financial situation clear to both my children. I told my daughter, ‘Mumma can’t keep buying your raw materials, you have to buy them from the profit you make’.”

The financial problems faced by single moms may leave you feeling like a juggler in a professional circus. Learning to be smart with your money will leave you with one less orange to juggle, and what could be better than that