Erin, 39, worries about her financial future. She and her three girls – twins, age 10, and their little sister, 4 – live near Kansas City, Missouri, where Erin shares custody with the girls’ father. She has been divorced for less than a year, and she is settling into her new life. Making financial decisions as a single mother is a whole new world for her, and while she is responsible with her money, she doesn’t always know which decisions will be best for her family’s future. The first one she had to make was where to live.
“When I divorced, my parents advised me to buy a house instead of renting an apartment,” she says. “They told me it would be better to build equity instead of throwing away rent every month. Ultimately, I have had to sink some money into the house for repairs and upkeep, but it does make more sense.”
She wishes she had treated money more as a partnership when she was married, and now she is working on educating herself so she can learn what she needs to know and not have to rely on someone else.
Erin wishes she had paid more attention to the household finances before her divorce. She has been working part-time for several years around her kids’ schedules, and is active in her community. From a financial perspective, it makes the most sense for her to go back to work full time after her youngest is in kindergarten next fall.
“When I was married, I wasn’t very involved in our financial life,” she says. “Now I have to take over for myself. I know I should have more of a budget, and I am considering my options on methods that work for me. I keep track, but I feel like I should be doing more to think ahead.”
Erin is careful to live within her means, and she is just starting to learn how to keep a budget. However, she is not sure where to put her savings and how much to save. Establishing her own financial independence is important to her. And saving for her children’s college funds is her top financial concern.
“My father was a successful attorney, and money was never an issue for my family, growing up in Louisiana,” she says. “I went to a private liberal arts college in Mississippi, and tuition then was probably 16-17 thousand dollars a year. I want to be realistic, but I want my girls to be able to go where they want to go. With the cost of college tuition going up all the time, I want to make sure I am saving enough.”
Erin has considered hiring a financial advisor, but she’s not sure how it would work for her.
“It’s my understanding that financial advisors get either a fee up front or a percentage of your investments; I’m not sure how it works,” she says. “Having someone manage my money is a big decision, and finding the right person to trust is intimidating. I’m not sure where to begin.”
She tries not to let her concerns take over, because she believes she is doing the best she can right now.
“I try to temper my feelings of concern with the knowledge that some people probably haven’t even started yet,” Erin says. “At least I’m working on it, and I think we’re on the right track.”