Single moms need to save more, especially for emergencies as they are single earners and have to bear all the aspects of home financing, financing for child’s future and savings for the future on their own. Single moms cannot to afford to take debt, therefore, they need to divert the money saved on debt to save for retirement and balance their income with an emergency fund. The types of savings in both the cases are quite different, where you need to open a short-term savings account and deposit a part of the savings in the account with easy access. But Minton advises to save in such short-term savings account until it matches with your one month’s salary and then deviate the amount you used to put in the emergency fund towards your long-term investments or into your retirement fund.
As per Minton:
The rest should be invested into a medium to long term investment vehicle, and a financial advisor should be able to help you with this. When your emergency fund equals three months (or better still six months) of your monthly salary, you can start diverting the money to your retirement savings. If you have an emergency fund in place, it’s much easier to deal with life’s calamities.
