Christina Mills reflects back on the financial challenges of raising two children alone, and offers some sage advice for other single parents.

“Go to all of those free financial seminars, especially any ones geared to women, until you understand what they’re talking about and all the different products and companies and mutual funds,” says Ms. Mills, 57, who recently retired from the human resources department at Dofasco Inc. in Hamilton.

While you’re there, scout out potential financial advisers until you find one you feel comfortable with. Work with the adviser to set up a retirement plan — even if all you can afford to set aside initially is $10 a month, she says.

“Your financial adviser has to be someone you trust, even more than your family,” Ms. Mills explains, because that person will be making decisions that determine the quality of the rest of your life.

Ms. Mills was divorced in 1980 when her daughter was three and her son 18 months old. Her former husband kept the house while she moved with the kids to an apartment. Her ex contributed financially and saw the children for about 10 years, then went on a disability pension and withdrew from their lives.

“He wouldn’t know them now if he saw them on the street,” she says.

As if going through a divorce were not trauma enough, separating parents often have a wrenching time sorting out their finances. Inevitably, both former partners end up poorer than when they were married because they’re now supporting two residences and facing more expenses than when they were living under a single roof.

In addition to the legal costs of divorce, there may also be daycare fees, as well as the cost of shuttling kids back and forth between two homes, and possibly buying two sets of sports equipment, toys or clothing to keep at each residence.

The family home is usually a couple’s biggest asset. After divorce, it may be sold and the proceeds split between the former spouses to help buy separate, usually smaller, places.

Or one spouse — often the mother — may opt to keep the family home in an attempt to provide stability for the children while “trading off the security of a pension” and access to other investments or RRSP contributions the couple may have made, says Sharon Rizzuto with Bick Financial Security Corp. in Grimsby, Ont.

“Many times [the value in] the house becomes the pension plan” for that spouse, says Ms. Rizzuto, who is accredited as a divorce financial specialist.

The problem is that even with the rise in property values in many parts of the country, real estate hasn’t appreciated as quickly or as high as the value of some stocks and mutual funds. So the homeowner will not only have to find somewhere else to live when she eventually sells the house to liquidate its value, she may also end up with less money than her ex-husband who kept the pension and/or investments and allowed them to compound over time.

That’s one reason spousal support agreements should be reviewed regularly, ideally once a year. “What appears as an equitable agreement at the time of separation may not pan out,” Ms. Rizzuto says.

Custodial parents who receive child support must also be extremely disciplined about setting aside enough money from the support payments to cover the income tax they will incur. When you’re strapped for money, it’s very easy to spend the whole support cheque each month, Ms. Rizzuto says. “The idea is to open a specific account and skim off enough from each cheque to cover the taxes,” she says. Otherwise you risk being hit with a large tax bill you may not be able to pay.

The custodial parent should also buy a term life insurance policy on their ex-spouse, Ms. Rizzuto says. If the former spouse dies, the life insurance kicks in and ensures the support payments will continue. Having such a life insurance policy may also be necessary for the custodial parent to be approved for a mortgage or a loan, especially if the support payments constitute a significant portion of income.

Custodial parents should also have their own life insurance and disability coverage. Group insurance plans offered through an employer are usually reasonably priced. Buying disability insurance as an individual is costly, but is considered a necessary evil if you can’t get it through your workplace.

Staying at home to raise your children may be great for the kids, but it penalizes the unemployed spouse financially when the marriage ends, something spousal support payments are intended to address. However, even if the stay-at-home spouse (usually the wife) returns to a well-paying job, she has still missed out on years of pension and RRSP contribution room for the period she was not earning an income, as well as career development opportunities, Ms. Rizzuto says.

Ms. Mills, who worked at Dofasco for nearly 40 years, says that “obviously, where you work” can have a huge impact on a single parent’s financial situation. She says she had “such an advantage” in terms of pension, benefits and early-retirement options.

But she says it was still difficult to find realistic financial advice. At financial seminars, for example, speakers often use examples based on men setting aside sums of money that are not realistic for single mothers.

Ms. Mills recalls an early-retirement workshop at Dofasco that drew “about 100 men and maybe five women. They talked on the assumption that you made $55,000 a year,” which is not realistic for most women, she said.

In her own case, she wasn’t able to start steadily squirrelling money away until about 12 years ago, when she met Ms. Rizzuto and started investing $100 a month.

“Over time it adds up,” Ms. Mills says. “That makes all the difference.”

Special to The Globe and Mail