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Make smart financial moves as a single parent

If you’re a single parent who works outside the home, it might be a minor miracle that you’ve found the time to read this column, let alone devise a financial plan of attack for yourself and your children. Here are some tips to help your keep your costs down. By Laura T. Coffey.

If you’re a single parent who works outside the home, it might be a minor miracle that you’ve found the time to read this column, let alone devise a financial plan of attack for yourself and your children.

As busy as you are, though, it’s important to do just that. In fact, your kids need you to do this for their benefit, even though they may not like it very much at first.

Here are 10 ideas and reminders that fall into both big-picture and small-picture categories.

1. Monitor your current spending. Chances are the bulk of your money is going toward housing, child care, health insurance, food, clothing and gasoline — but how much is going toward each category, and are there ways to simplify and cut back before all the money vanishes each month? To find out, scrutinize your spending over a period of two to three months.

2. Be up front with your children. Have an honest discussion with them about the family’s financial picture — especially if you’re a suddenly single parent. They have the capacity to understand their changed circumstances and help the whole family curb spending once you arm them with the truth.

3. Save on child care. First, look to family members for help. Next, if you can alternate your work schedule with someone you trust, you can share child-care duties and save thousands of dollars annually. You also can shop around for care by getting referrals from your county government, the nonprofit initiative Child Care Aware (http://www.childcareaware.org, 1-800-424-2246), your child’s school, your church, friends, co-workers and neighbors.

4. Pursue tax breaks. You likely qualify for the child-care tax credit as a working parent. Depending on your income, the credit allows you to deduct a percentage of up to $3,000 in day-care bills for one child or $6,000 for two or more children. You can read more about the tax credit here (http://www.irs.gov/publications/p503/ar02.html).

5. Shop wisely for work clothes. Opt for a professional style that isn’t too trendy, and buy interchangeable items in basic colors such as black, tan, gray and blue. You can often find nice suits and other work clothes at thrift stores for pennies on the dollar. When possible, look for wash-and-wear items that don’t have to be dry-cleaned.

6. Make a list and check it twice. Save time, money and gasoline by grocery shopping and running errands on the same day at locations near one another. By jotting down a list, you’ll stay organized and focused on what you really need.

7. Visit libraries instead of book and video stores. A trip to the library can be much more fun than a trek through Barnes & Noble or Blockbuster — especially if you time your visit during a nifty activity for your kids — and everything in the entire place is free.

8. Save for college and retirement. Even if you can only set aside a very small amount of money for these two major investments, do it anyway on a regular basis. It will add up, and compound interest will prove to be your friend over time. Have money deposited directly from your paycheck into a state-sponsored Section 529 college savings plan in your name and into a 401(k) — especially if your employer provides a matching contribution. (Side note on this: If you’re surviving on a very limited income, place more emphasis on retirement savings and an emergency fund than on college savings. That’s because your child likely will qualify for financial aid based on your family’s income level.)

9. Make sure you have adequate insurance coverage. Especially if your family doesn’t have a backup breadwinner, be sure you have enough disability and life insurance to cover your income in case you become disabled or die before your children reach adulthood. Life insurance has been dropping in price lately, and by shopping around you may be able to secure $1 million in coverage for as little as $500 a year, or slightly more than $40 a month. To figure out where to look, read my past “10 Tips” column on life insurance .

10. Set up an estate plan. Your estate plan and will should name a guardian for your minor children and spell out how you want your money distributed to them.

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