3 money tips to help single moms build wealth

(BPT) - Four years ago, Dr. Lakisha L. Simmons was newly divorced, parenting two young kids and living beyond her means.

“After putting the children to sleep, I would be alone at night in that big five-bedroom house,” she said. “I’d just sit there and think to myself, ‘What am I going to do?’”

Simmons decided — as she had throughout her life — to take action.

Her first step was to get a handle on exactly what her finances looked like. She chose to start with Personal Capital, a free online tool that lets her see all of her finances in a single dashboard. After seeing her debts and assets all in one place, she was ready to slash expenses — starting with her hefty mortgage. She downsized to an apartment, got comfortable with budgeting and learned to invest. Within the span of four years, Simmons amassed a $750,000 net worth.

Her message to other single mothers? “All you have to do is take one step forward,” she said. “Just take one step at a time and you will get there.”

Building wealth as a single mom

This past year has heaped financial strain on many parents, particularly single mothers. Among full-time workers, mothers are typically paid only 75 cents for every dollar paid to fathers.

Recent research also reveals a striking longer-term financial impact.

A Personal Capital-Empower Retirement survey found that a majority (62%) of single working moms no longer feel confident in their ability to plan for retirement. Conversely, less than half of the general population (40%) lacks confidence in their retirement plans.

The survey also uncovered that working single mothers, compared to the general population, are more likely to:

  • Be paying off a student loan
  • Not be able to achieve savings goals
  • Anticipate missing a bill payment due to the pandemic
  • Say they are “barely surviving” financially

For Simmons, scaling back living expenses was critical to the confidence she now has in her financial future. Although she would’ve been able to sustain her lifestyle, she knew she wouldn’t get ahead.

“For all those years, I'd been working for my money, but now I needed my money to make a return on investment for me,” she said. “It was crunch time — my partner's gone, I have one income, I have two boys. I have to figure it out."

Finance tips for single moms

Since selling her house in 2017, Simmons has taken big steps toward her goal of financial freedom.

She learned everything she could about investing. She started side hustles, like writing The Unlikely AchieveHer, taking speaking engagements and delivering goal-setting workshops. She maxed out her retirement accounts, including a 403(b), 457(b) and Roth IRA.

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Here’s how she defied the odds.

1. Really look at your financial picture.

“I always say, ‘Get a tool like Personal Capital so you can see and automatically track everything,’” Simmons said.

In order to build a plan, Simmons advocates that people should first know what they have and what they owe, and get familiar with all of their financial accounts.

“I find that so many people just don't even really know where they stand,” Simmons said. “I've had women tell me, ‘I'm afraid to see how much debt I really have’ or ‘I'm afraid to know what my picture really looks like.’ It's scary.”

She recalls her own financial turning point following her divorce: “I was afraid, too. But I would encourage women, all you have to do is take one step forward.”

2. Get on good terms with your budget.

For Simmons, budgeting is not about deprival. Instead, she refers to her own method of money management as her “budget bestie.”

“You really need to be close with your budget — to know everything that's going out at any given time,” she said. She uses both online tools and spreadsheets to manage her cash flow, analyze her investments and plan for long-term savings goals like retirement.

Most experts agree that the highest-impact financial action people can take right now is to set aside a cash emergency fund of at least 3-6 months of expenses.

3. Invest in your own future for your children’s future.

As a parent, Simmons believes it’s important to make the big money moves that feel right for you. In her own life, early retirement is important. Once she builds up her nest egg, she knows she has the practices in place to live off it.

Simmons believes in establishing her own financial security so that she can support her kids in their own future goals. Perhaps equally important are the money lessons she passes down.

“When they start working, trust me, they will be helping pay for their own college and investing in their future,” she said. “It’s OK to let your children know that they have responsibility in their financial education.”

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