Money and the single mother

Financial literacy remains a concern when it comes to South Africans' household income management - and single mothers are among the hardest hit when it comes to financial planning.

The Old Mutual Savings and Investment Monitor found that 48% of South African households consider themselves headed by a single parent, and only 12% of the single mothers received regular support from the father of their children.

The study found that single mothers are also putting their retirement planning on the back burner. "Many single moms don't have support and find themselves under tremendous financial pressure. They often have parents and children to look after, and they put their own needs aside," said Lizl Budhram from Old Mutual Personal Finance.

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The monitor found that single mothers lacked confidence when it came to their finances, with only 20% saying that they felt financially secure.

Budhram said this particular figure shone a spotlight on the need for suitable financial advice, particularly for single mothers who struggle to put together a solid financial plan while juggling their responsibilities.

Budhram said one reason many single moms avoided seeking financial advice was that they do not believe they earn enough money to warrant managing their money professionally. "A lot of the mothers believe that you need to be in a certain income bracket and then only can you seek financial advice."

Budhram cautioned against this, saying that the sooner parents started their financial planning and making sure that their budget is aligned to their spending habits, the easier it would be to make space for their needs in the future, thus putting themselves in a better financial position in the long run.

The study also found that 45% of parents expected their children to take care of them in their old age and so did not make provision for their retirement. The survey indicated that they focus on their children's needs first. "This is obviously not ideal because you want to create life-long financial independence," said Budhram.

Budhram said the government could assist single mothers by coming up with measures that encourage fathers to make a financial contribution to their children's maintenance. Relief through income tax incentives could also help ease the burden on mothers.

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Single mothers could:

• Plan for their retirement so they don't have to depend on their children;
   
• Make provision for their children's education so they can gain independence through a tertiary qualification and employment. A professional financial planner should be able to help choose investment vehicles that are suitable for their needs;
   
• Budget to identify financial priorities and areas where spending can be cut in order to save and invest;
   
• Make provisions for their children in the event of the mother's death;
   
• Find a savings product that works for their particular situation and begin saving, even if it's a small amount. Putting money aside in an investment account over a long period can help in the long run; and
   
• Take advantage of tax-free savings vehicles but avoid a typical bank account because it will not offer attractive returns over the long term. Invest in a product that promises to beat inflation.

tsamelad@sundaytimes.co.za