Single Moms Under Financial Pressure Due To COVID-19
According to Pat Magadla, Senior Business Development Manager at Old Mutual Investment Group, this is particularly a risk for single-income families in South Africa who are most likely headed by a single mom. "It's clear that not only are women at a serious economic disadvantage to start with but single mothers in particular shoulder enormous responsibility for the wellbeing and financial security of their families – with little or no help," says Magadla.
According to the 2020 Old Mutual Savings and Investment Monitor COVID-19 Special Report, 41% of women with children consider themselves single moms, and 60% of them receive no financial contribution at all from the fathers of their children. This is up from 47 % in 2019.
Reports from the UK and the US suggest that the COVID-19 pandemic has impacted low income, black, Asian and minority ethnic women most significantly. "The impact of COVID-19 globally is reported to be more severe on black women, who face greater exposure to financial vulnerability, compounded by the weight and responsibility of caregiving, often for their extended family too," says Magadla.
"Single mothers already show remarkable resilience in so many aspects of their lives. They juggle parenting with a career or business and running their household. With the uncertainty of the 2020 school year, many have had to take on the role of home schooling, too."
Given all this, it's understandable that some areas face neglect. According to Magadla, it's often financial planning that suffers most. "A key way that mothers can protect their families' future is to start an emergency fund that will see them through an unforeseen crisis or being let down financially by their co-parent," says Magadla.
Magadla offers the following practical steps to help single mothers improve their financial resilience.
Be prepared: Increase your savings
Part of building your resilience is being prepared for any eventuality. Increasing your savings as much as you possibly can is the first place to start.
Ahead of tax season, Magadla encourages using any financial windfall you get, such as a tax refund, to seed your savings.
Lockdown has also shown that we can live without certain luxuries. Magadla says "now more than ever it is important to cut expenses where you can. For instance, do you need that DSTV subscription? Or how about making homemade pizza, doing your own hair at home, and creating your own birthday cards to gift loved ones?".
Be smart: Reduce your debt
The less of your income goes to servicing debt, the more financially resilient you'll be. We should all try to live within our means and avoid bad debt. Magadla points out that bad debt is usually high-interest bearing such as credit and store cards.
Be proactive: Ensure your financial wellness
A smart move is to diversify your income by having more than one way to earn money. That side hustle you've been talking about for years? Start it now, says Magadla. By being less reliant on a single source of income, you can create a valuable buffer."By securing their financial independence, single mothers can mitigate income gaps and ensure that, regardless of economic scenarios, your children's future is still secured."
For those moms who are already in an awkward position financially, Magadla says "acknowledge your situation but understand that it can be turned around. Draft yourself a plan, take action and stay the course".
"If COVID-19 has shown us anything, it's that the world can change overnight. Things that we took for granted – such as hugging a loved one or shaking a stranger's hand – are no longer an option. We need to be able to thrive both personally and financially, whatever the world throws at us. This kind of resilience can only be achieved through proper planning, and it's never too late to start," concludes Magadla.
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