Wealth managers' best advice for single moms ahead of Mother's Day

The old saying is as true this coming Mother’s Day as ever: A mother’s work is never done.

And that goes double for single mothers, who often need all the help they can get, especially from their financial advisors.

Leslie Thompson, co-founder of Spectrum Wealth Management, said single mothers can protect their financial futures while raising their children by taking proactive steps to manage their money wisely and plan for both short- and long-term needs. In her opinion, one of the most essential actions is to create and consistently track a realistic budget. She points to free online websites, such as Credit Karma, that simplify this process by monitoring expenses and comparing them to one’s budget in real time.

She adds that building an emergency fund with the help of an advisor also provides a critical safety net for unexpected expenses. It's also essential to secure disability insurance and a reliable income, which may involve pursuing higher education or job training to improve earning potential, according to Thompson.

“Even with small contributions, planning for retirement and children's education helps lay the foundation for long-term security. Legal measures like drafting a will and designating guardianship for children further strengthen financial and family protection. While this seems like a lot, know that little steps along the way will yield favorable results,” Thompson said.

Long-term goals and trade-offs

Kassi Hyde, wealth management advisor at Apollon Wealth Management, adds that for longer term goals like education planning and retirement, single mothers should take advantage of “free money” options like employer matching or tax savings for a state 529 plan. She also suggests looking at other options including HSA’s, FSA’s and Dependent Care accounts through an employer to look for ways to cover family expenses in the most tax efficient matter.  

“Understand the trade-offs to wanting to pay for children’s education versus saving for your own retirement goals. You don’t have to choose one over the other, you can find a happy medium between the two. Planning out the timing of your savings for both is crucial to not sacrificing one for the other,” Hyde said.

Meanwhile, Abigail Gunderson, senior wealth advisor at Tanglewood Total Wealth Management, recommends single mothers encourage their older children to take on part-time jobs to foster self-reliance and help them develop a deeper appreciation for the value of their hard-earned money.

“This gives single mothers the flexibility to enjoy personal spending while easing the financial pressure of meeting both essential and discretionary expenses, and simultaneously empowering their children to use their own earnings for things they want, helping to reduce the overall household burden,” Gunderson said.

Navagating divorce

For women with children and are going through a divorce, understanding the new financial reality is crucial. It's important for mothers to accept that a budget that once supported one household must now be stretched to support two. This shift often requires significant financial adjustments.

“Typically, one spouse has handled the family's finances more closely, and if that isn't you, it becomes essential to fully educate yourself about your financial situation as you enter negotiations,” Thompson said.

Thompson advises single mothers work with a Certified Divorce Financial Analyst to help ensure they make informed decisions about asset division, taxes, and planning for the future. These professionals may also unravel assets and liabilities they may not be aware of.

Women must also advocate for fair support agreements that address current expenses and long-term costs related to children, such as education, healthcare, and extracurricular activities, according to Thompson.

Emphasized Hyde: “The key is to truly understand your settlement agreement before you get divorced.”

That means reviewing which accounts are taxable, what the potential taxable gains are, and which accounts cannot be accessed without penalty before retirement. When accounts are taxed differently, their value is not equal.

“This will help you create a plan to fill those gaps going forward, whether you need cash flow now or need to build your own retirement savings,” Hyde said.

It is also important to have an arrangement for how the expenses for the children will be paid, notes Hyde. Things like sports dues, tuition and club-event costs can add up and it’s important that these expenses be shared.

Finally, Gunderson reminds divorcing clients to remember the importance of their credit scores before heading out on their own.

“Because credit scores are often linked to a spouse’s credit history, it is important to build and strengthen your own credit profile, ensuring it is free of debt-related issues, Gunderson said. "A strong credit score can help you make essential purchases, such as securing housing, so you can provide a stable and supportive environment for your children after divorce.”