Making Change When You're Counting Pennies: How A Single Parent Can Turn Their Financial Future Around

If you're living paycheck-to-paycheck, consider yourself in good company. Many Americans are bearing the same burden as you, but if you're a single parent, that weight can be even harder to bear. How in the world are you going to start saving when it's all you can do now to make ends meet? It is possible, and you can do it. While it won't be easy, you have to believe in your abilities and pick a time to start. Why not right now?

1. Hammer Out Your Budget

No matter how much or how little money a household has to work with, there's really no forward progress made financially without a solid budget underfoot. Put up with the headache you can expect when going over your budget and work it out until you have a clear picture of the numbers. Consider the different ways you might be wasting money, even in seemingly insignificant amounts. Look at your budget from an outsider's point of view, removing any emotional attachments and determine where and why to make the cuts that will propel your future financially.

2. Find A Way To Start Saving

According to the experts observing American savings habits, a frightening 62 percent of people have less than one thousand dollars in their savings account, a fact you might be able to relate to. That means, of course, that few people can even fathom the task of preparing for retirement. While you may be preoccupied with just buying groceries and paying rent at present, you must start thinking of that fast-approaching future.

If you discovered a few ways in which you might be wasting money, turn that over into savings to at least get the financial ball rolling in your favor. Even $20 a month turns into something presentable at the end of a year, leaving you with over $1,000 to begin earning interest or possibly invest somewhere. It all starts with the discipline to bank the "extra" money you find in your budget. Once you do that and get a taste of what it feels like to be on the right path, real change begins.

3. Consult With A Financial Planner

Entering into a contract with an investment services company can be a big deal for someone living on a small budget, but don't let that intimidate you. Many investors start out small, be it due to budget constraints or newbie nerves and financial planners understand your perspective. Once you are fully aware of your exact financial circumstances, like how much you really need to budget and how much you could potentially put aside, make an appointment with a planner who will help you make dollars and sense out of your financial future, hopefully forging a plan you can rely on indefinitely.

4. Educate Yourself As An Investor

In addition to the potential long-term earnings as an investor, there are other factors to consider when tying up your hard-earned money. Make sure you are aware of them moving forward, so you can plan your budget accordingly, with as few surprises as possible:

  • Getting your money back quickly, if needed: Buying bonds or into mutual funds, for example, should allow you the option to sell quickly if an emergency arises; however, you should know that you're not as likely to see any return on your investment by selling early.
  • Expected earnings in the meantime: Some types of investments will pay you interest or dividends that you could use to solve short-term budget issues, while maintaining your focus on the long-term value of the investment.
  • Anticipated risk: Since there are no guarantees when it comes to most investments, can you afford the potential loss that may be associated with it?
  • Diversifying to protect your interests: Especially for long-term investors and those with so much at stake, such as your children's educational future and your own retirement, diversity can help you absorb potential losses and bounce back from market lows.
  • Evaluating your tax position: Buying into savings and some municipal bonds could leave you exempt when it comes to taxes, but look into tax-deferred opportunities, too, where you could delay or eliminate a potential tax all together. Tax-deferred investments often apply to things like retirement and tuition.

5. Consider Starting A Small Business

While it may seem like you don't have the time, money, or energy to run a business, starting small, such as turning a hobby into an income, could very well work out for you in the long run. After the basics of your budget and potential investment portfolio have been laid out, start thinking about your talents and passions and how you could turn them into something lucrative. Yankee Candle company, now a highly successful business, actually started out with the founder having to hand-make a candle out of crayons for his mother because he had no money. You never know what you can do until you try and you shouldn't discount your potential in any way, no matter how "low budget" your life seems at this moment.

Living paycheck-to-paycheck is not easy, but once you begin to see the light at the end of the financial tunnel, the burden you bear as a struggling single parent should lighten up a little. Consult with an experienced expert who can guide you, batten down the hatches with your budget, and first and foremost, believe in yourself.