Dr Priti Chaudhary became a freelance medical consultant after she decided to be a single mother. Her planning for the child's future and her own financial stability began four years before she adopted a girl child in 2022.
"I bought a house near my mom's place in Delhi NCR as I wanted to give my child a stable home where she doesn't have to shift every few years. I increased my mutual fund investments so that I had back-up money when I get the baby. This helped me not only with financial security but emotional security as well, which, I think, you need more when you become a parent," she said.
"With MF, I always have a good chunk of money that I can use for any kind of financial emergency. I want to use PPF mainly as my retirement corpus so that when I stop working, I am not dependent on anyone financially."
Right financial planning and proper use of investment tools like mutual funds and PPF helped Dr Chaudhary achieve both her short-term as well as long-term goals.
She had the time to work out the financial blueprint for herself and the responsibility she was taking up. But, the situation is not the same for many single mothers like Shruti Sharma, 43. She is not a single parent by choice. "My biggest challenge was to deal with finances without being overwhelmed," she said. Sharma lost her husband while the family was living in Chicago in 2015.
"Every little thing would give me anxiety, especially paying taxes, investing money and generally taking care of finances with our future in mind."
On returning to India, she set up her own production house, Billi Productions in Delhi in 2019 with the money she saved during her stint with several media houses in the US.
The plight of raising up a child alone made her more confident and financially more aware than most of the women of her age. She invested in educating herself about investments, banking and diverse policies. If time could be reversed, Sharma would prefer to have access to all investments, policies, and other bank investments along with her husband.
It was hard for Sharma to fight it out all by herself. The void left by her husband would never be filled but she managed to emerge successful despite the odds. She represents thousands of women who become a single parent because of circumstances.
Reema Ahmed penned the plight of single parents in her book Unparenting. The Agra-based mother calls herself a neuro linguistic programming-based life coach and a mental space psychologist. She became a single parent to her son in 2013 after divorce from her husband. Without any support from her ex-husband, she found herself completely unprepared both emotionally and and financially. "The biggest financial challenge was emotional, feelings crippled, and finances crunched," she recalled.
Her health issues stopped Ahmad from getting into a job soon after her divorce. She continued her studies, which helped her gain financial stability later on.
"In India, as women, our relationship with money is very flawed. We feel guilty in taking money or accepting help," she said.
Ahmad was not involved in financial decisions before or after her marriage, which led to her unawareness of finances. However, being a single mother, she is aware of the basics of financial literacy. While she still struggles with her finances, she has managed to provide for herself and for her son's needs, including a good education.
"Women should be prepared before entering a marriage by knowing how to drive, manage bank accounts, budgeting, investments and how to do taxes," she said.
Chaudhary said that becoming financially literate has helped her in finding her freedom not only as a mother but individually as well. It has also helped her in planning monthly and annual budgets.
"I am able to save money for travel and leisure activities. I am using an Apple phone budget spreadsheet, and I have a capping for each kind of expense; I try not to go above that capping; if by chance I do go, I try to spend less in another area so that I don't go above my monthly budget," Chaudhary shared.
What should clueless single mothers do?
Kalyan Kumar, a NISM investment advisor, shared that single mothers should first figure out their financial goals. "Your goal can be buying a house or for your child's foreign education after 5+ years, or buying a house. Thus one should invest accordingly," Kumar said.
While investments are crucial, Kumar highlighted the importance of health insurance, term life insurance and emergency liquid funds that can last for up to 6-12 months. Instead of keeping the emergency funds in banks, one should invest in a liquid fund that can generate 4 per cent to 7.5 per cent returns per annum, he added.
Ideally, after securing emergency funds, it is advisable to get health insurance in the early 20s and term life insurance in the early 30s as a necessity, as per Kumar.
One can invest in much safer investment options such as PPF, which can generate 7 per cent returns and has a very low-risk level, and also in Small savings schemes such as National Savings Certificate (NSC) or Sukanya Samriddhi Yojana(SSY), according to Kumar.
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