When it comes to being a single parent the financial responsibility of raising a child and running a household falls often on you alone. You may receive maintenance from another parent, you may pay maintenance out or it may be that there is no maintenance arrangement; whatever your particular situation is it is important to make sure that you have enough coming in to make ends meet for you and your family.
As a single parent there are many financial options for you to investigate, for example if you are a stay at home dad with a very young child and unable to work you may be eligible for housing benefit, council tax benefit, income support and more. You may also be eligible for some of these benefits if you work, including help covering childcare costs. The benefits system may be something of a minefield which is why here at Dream Bear we put together a wealth of information explain the different benefits, how you apply and more. Of course whether you are eligible depends on your individual circumstances but you don’t know if you don’t try.
Many lone parents tell us that what they find most difficult is making their income stretch to cover everything they, their child/children and their household needs. Budgeting including meal planning, savvy shopping and more are just a few of the things we cover in this section, helping you dads regain control of your finances once more and reducing or eliminating the stress of money matters.
Regardless of your situation we offer free and impartial advice on money matters, helping you live within your means and enjoy life more. Where necessary we also signpost you to other agencies where you might find more specific information, for example on how to deal with debt, child maintenance problems and more.
When it comes to stretching the pounds and the pennies you’d be surprised how much easier it is when you know how, especially if you’re not afraid of trying some more creative methods of making ends meet!
One of the most difficult things to do as a single parent is manage everything financially, particularly if you have found yourself on a single income suddenly yet have been used to a dual one. Your income may change too perhaps as a result of changing your working hours to spend more time with your children before and after school, or you might decide that for a time you will give up working outside of the home. All of the choices you make as a single parent in one way or another tend to impact your finances.
Here at Dream Bear we have been in this very situation, where perhaps every penny needs to stretch as far as possible in order to ensure that your financial obligations are fulfilled and that you still have enough to live on. The difference between managing on a reduced income (or with higher outgoings) is in the budgeting.
A properly thought out and manageable budget will fast become your best friend, particularly when it comes to reducing the stress that comes with trying to balance the household books when you are a single parent. Here at Dream Bear we help you with information on benefits, managing debt, how to set up an appropriate budget, tips to help you stick to it and more.
Having a clear record of what comes in and an exhaustive list of what goes out is the first step to putting an effective budget together so before doing anything else, get this information together. Track all spends large and small (including that one takeaway coffee or pastry) as it all adds up. After you have that information organised revisit this section as it is designed to help you identify drains on your budget and how to live within your means, even saving a little perhaps as a single dad.
Dealing With Debt
Dealing with debt is known to be a key contributor to depression as well as stress and anxiety. It is very easy to fall into debt when you are trying to juggle home and family expenses on just one income. The dealing with debt section looks at a number of factors, from directing you to our budgeting section (living within your means stops you falling into debt or contributing to your debts), our benefits section (if you are on a low income benefits can help), our mental health section and information and support on debt-specific matters.
Debt can be a spiraling black hole, with interest rates and credit charges eating up any payments you make so that you don’t actually see your debts going down. When you find yourself on a limited budget or your credit obligations being higher than is comfortable this is where things start to go wrong. You take from one pot to pay another, then have to put it back at the expense of another and on it goes.
Dealing with debt not only stops you getting yourself into a worse situation than you are already in, it helps to reduce or eliminate the enormous amount of stress being chased for money or watching your finances spiral out of control can cause. Trust us, we’ve been there. What you can’t do is bury your head in the sand as the situation can and will get worse.
On the upside there are steps that you can take and people you can turn to, including us for help, advice and support. One popular and very effective way of dealing with your debts is to look at a debt management plan. We’ll cover the ins and outs of these in more details later however in basic terms you work with a company (we recommend Stepchange who are free and impartial) who take your income and expenditure and debt information into consideration and put together a realistic budget which includes debt payments. They then liaise with your creditors on your behalf.
More on DMPs later but for now please do take action if you find yourself in debt, it can be managed.
Debt Management Plans
Falling into debt is easier than it sounds which is frightening when you consider the many ways that debt can affect your life and the lives of your family. Contrary to popular belief the majority of people don’t get into debt because they are frivolous; far from it. Some of main causes of debt include poor financial planning or lack of financial knowledge (including how to work out and live on a budget) as well as being on a low income.
A debt management plan is one very effective way to to deal with your debts, and we are going to reference Stepchange, the UK free debt management plan charity who work with you (again, for free) to help you get on top of your debts in this article as they are the authority on Debt Management Plans.
Once you’ve reached the point where you’ve realised you need help your first port of call should be Stepchange. They offer free debt advice and are providers of debt management plans.
What Exactly is a Debt Management Plan
A Debt Management Plan (or DMP) is an informal agreement made with your creditors in order for you to continue to pay off your debts although at a rate that is easier to manage for you. When you speak to a DMP company (beware, some charge for the privilege) they typically talk through your issues (there’s no blame or tellings off) and take information about your circumstances, your household, your income, expenditure and your debts. They use this information to make recommendations on what they believe would be the best way forward for you from that point.
If the recommendation is a DMP Stepchange will put together a manageable budget for you, which includes all of your bills, expenses, foods, car tax…. everything. What is left when you take the expenses from the income Stepchange will suggest using to pay your creditors with.
Dealing with Creditors
One of best things about a DMP and working with a company such as Stepchange is that they communicate and advocate with your creditors on your behalf. They will contact them all, explaining that they are helping you with your debt, show them a version of your budget, how much is left and will be used towards debts and what each company will get (worked out in proportion to what they owe). Stepchange take tyour “debt payment” via direct debit each month and pay each individual creditor their share. You receive online (or paper) statements from Stepchange showing what has been paid and what your balances are to date.
What About Interest
It is important to remember that a DMP is an informal agreement and not legally binding. That said when you are working with a reputable company such as Stepchange they understand that you are taking charge of the situation, will pay as much as you can afford (according to Stepchange) and quite often companies are quite happy with this (after all, it’s better than them not being paid anything). More often than not creditors will reduce or stop interest altogether, although this isn’t guaranteed.
Why are DMPs so Popular?
Apart from the huge relief that you get when you realise it isn’t as bad as you thought because you have people fighting your corner, with a DMP you are being proactive about paying your debts while living within your means and having enough for what you need. Yes of course it will take you longer to pay off your debts than if you were paying the amounts set by the credit companies however if could manage that easily you probably wouldn’t be reading this article. Another plus point for those on a DMP is that usually once the payments are being made regularly and all concerned understand that you are working with Stepchange the phone calls and letters tend to stop.
If you feel your debts are getting out of control and you are struggling to manage get in touch with Stepchange, the Citizen’s Advice Bureau or National Debtline for advice and support tailored to your individual needs. Whatever else you do, do not wait it out and hope it’ll fix itself as it won’t. By taking control of your debts you will be building a better, happier and much less stressful future for yourself and your family.
Raising a family is expensive and as a single dad finding the funds for everything you need can be a push at times. We’ve looked at savvy shopping, ensuring you claim your benefits and more however sometimes it might be worthwhile looking at other ways to increase your income.
Sell Your Unwanted Items
Car boots sales, Facebook buy sell sites and similar are great ways to get rid of your unwanted items. It is well worth having a good sort out in the attic or the garage and having a good declutter from time to time as not only will you have more space, you’ll have more in your pocket. There are a number of other online sites such as Mazuma Mobile for recycling old phones and technology, We Buy Books for books and Music Magpie for CDs, games, DVDs and more. These are however just a few of the sites you could use so make sure you have a good look around to see who offers the best rates.
Enjoy the Benefits of Cashback
Spending is often unavoidable when it comes to being a parent, and when you can can’t buy secondhand search for retailers through cashback sites such as Quidco and TopCashback to see if you could get as good a deal via their recommended retailers and earn yourself some cashback on your purchases. You can even get cashback on services such as insurance, SKY TV and more. This can soon add up to a significant amount.
Be Rewarded for your Loyalty
If you use loyalty cards for places such as Boots, have a Nectar card or a supermarket cards or member scheme take advantage of the points and vouchers you get back. Tesco for example offer customers the chance to double up their clubcard vouchers every three months to use in their Boost promotion both in store and online. Depending on what you want to use them for you could even use them for up to four time their face value.
There are a number of research companies crying out for people to test products and/or answer survey questions, all things that you can do in your own home. Some allow you to join and start immediately while others have a waiting list. Look up Prolific Academic, Pinecone Research and more for a chance to make a little extra money from home.
What About the Taxman?
HMRC have produced some excellent guidance which clears up the grey area around selling items from home and whether you should register as self employed. Remember that all income is potentially taxable so make sure you know which camp you fall into and keep records of all income and expenses.
It is not very difficult to earn a little extra from home or after work however in order to avoid getting into trouble down the line make sure that you are on the right side of the HMRC and avoid the many work from home scams that are doing the rounds. Some are easy to spot while some are more difficult and could end up costing you money.