Recent statistics reveal that less than 40% of children in South Africa have Fathers living in the home. One can only surmise then that very few of the absent Fathers are making a significant financial contribution to the family budget, but even when they are, being a single Mother is tough and requires a level of resilience that those who are not in their positions can’t even comprehend.

One thing that can greatly assist them is the knowledge of how to not only survive their financial situation but to rise above this to create financial wealth and build a legacy for their children. Here then are a few wealth creation basics which we hope will be astute Financial advice for single Mothers…

Budget to create a cash cushion

Couples and single Mums face financial challenges all the time but single Mums probably will feel it a little more. It is essential that you create a budget, understanding exactly what money is coming in and what you can afford to spend. Even difficult situations become a lot less daunting if you have a plan – and your budget is exactly that.

We say it all the time and we’ll say it again – budget to save and save to invest. Even those with tough budgets usually can find something to save at the end of the month, providing they are prepared to make some sacrifices. Even at this stage, it’s a good idea to consult a good Financial Advisor who can show you how to turn that small saving into an investment that will give you good returns and can be used as a ‘cash cushion’ when really tough times arise.

Medical and income protection cannot be compromised

If you think your circumstances are tough now, imagine if you are taken ill and unable to work, or pay the medical bills. Most people know that medical aid is essential (remember if this is not covered by your employer there are excellent cheaper options like hospital cover with gap cover) but few realise the vital importance of income protection which should be a first priority. Again, talk to your Financial Advisor about this.

Retirement and tax reduction

A Retirement plan may be in place if you work for an employer but if it’s not or you are an entrepreneur then the best retirement option is Retirement Annuities (R.As). This is because there is a significant tax saving on your premiums (up to 27.5 % of taxable income) and reducing your tax burden is essential as a single Mum.

There are many other ways to save on tax too like claiming on various expenses if you are an Entrepreneur or an employed commission earner whose commission exceeds 50% of total income. Once again, remember that Financial Advisors are tax experts too, so seek their help in this regard.

Leaving a legacy

As a single Mother a first priority will usually be to ensure that when you are not around your children will be well cared for. There are 2 very affordable ways to do this. One is to ensure you have a Will so it is clear that whatever you own or have accumulated will go to your children.

The other is to take Life insurance cover which is very affordable and paid out immediately to the assigned beneficiaries, enabling them to cover funeral expenses and have an income for living expenses. Remember children under 18 cannot inherit directly though, so speak to your Financial Advisor about ensuring that the funds will be correctly administered to them.

As your wealth grows you can do more intricate estate planning ensuring that your children will have minimal tax implications or headaches when you die, and of course put tertiary education savings in place.

Grow in time – with professional help

At Hereford group we are renowned for understanding that every individual or business is unique and has different circumstances so our Financial Advisors are trained to handle every type of financial need.

Unfortunately, many single Mothers who are not big income earners think that Financial Advisors are only there to assist wealthy people but this is not the case at all. Talk to us and you’ll find out that we are there for anyone who has the desire and the determination to create and preserve their wealth. Remember that just a single seed planted in the right soil can, in time, yield a mighty tree!