Financial Planning Tips for Singles

According to a report released in 2005 by the U.S. Census Bureau, approximately 90 million adult Americans were single. That’s 41% of all U.S. residents over the age of 18.

People often assume that financial planning is easier for single people than it is for married couples or people with families to support. However, this is not necessarily so. It is true that there are generally fewer factors to consider when planning a financial future for when you only have yourself to think about. This provides for more flexibility and less complication. Also, single people don’t have to deal with the conflicts that arise when attempting to make financial plans with a spouse, especially one with whom you don’t share the same financial goals.

However, single people are also at a disadvantage because they only have themselves to depend on. Thus, singles need to manage their finances more carefully and plan ahead for unexpected expenses such as medical bills and loss of employment. As a single person, it is up to you to generate a sufficient income, set goals, make smart decisions and plan for your retirement. You have no one else to count on for motivation or assistance in reaching your financial goals. Whether you are single by choice or have suddenly become single due to divorce or the death of a spouse, planning for your financial future is essential.

Whether you are single or married, budgeting is one of the key factors in any financial plan. Budgeting is typically the first step towards financial success and independence as well as eliminating debt. Without a budget, you often have no concept of where your money is going and how much you are spending in relation to your earnings. A budget helps you to recognize in what areas you can afford to cut costs.

The term “budget” has come to be somewhat of a dirty word, but a budget does not have to mean strictly denying yourself of all unnecessary purchases. Rather it allows you to prioritize your finances so you have some money to put towards the things that you really want. You can still make room for some “fun money” in your budget if you plan carefully. A budget simply shows you how to live within your means and provides you with a road map that will lead you towards a stable financial future. The sense of control and independence that creating and sticking to a budget often provides can also be very liberating.

If you have accumulated debt, which most Americans have, it is important to take the steps to begin to free yourself from its often-paralyzing grasp. Figuring out exactly how much money you owe and whom you owe it to is essential to creating a plan for paying it back. Being aware of your interest rates is also very important. If you have a lot of credit card debt, you may be able to work with credit card companies to lower your interest rate or transfer balances to lower interest cards. Be weary of organizations that ask for money in return for advice or help in getting out of debt. They are generally scams and will only leave you with more debt than you had to begin with.

While paying off debt may seem like your most important financial priority, it is a good idea for single to people to create an “emergency fund” before attending to any other financial goals. Financial experts suggest setting aside enough money to finance three to six months’ of living expenses in an account such as a high-yield money market. As a single person, you often have no one to bail you out if you run into financial hardships. Without the safety net provided by a second income or health insurance provided by a spouse’s employer, it becomes even more important to plan ahead. Your emergency fund will become your safety net.

Many single people, especially young people, tend to think that health insurance is an unnecessary of even frivolous expense. Young people have a tendency to think that they are invincible, but the reality is that anyone can become ill or have an accident, regardless of their age or current health condition. When this happens, managing outrageous medical bills all on your own can quickly thrust you into a sea of debt that may take you decades to pay off. Also, if you are the only source of income for your household and you miss work or lose your job due to an illness or accident, you are at any even higher risk of accumulating massive debt.

Another key to the success of the single person’s financial plan is investing for the future. Even young singles need to start thinking about saving for retirement. It’s never too early to plan ahead. Who knows whether Social Security funds will be around by the time that you are of retirement age. Investing may seem impossible if you are struggling with debt and living from paycheck to paycheck, but the sooner you start saving, the less you will need to save overall, especially if your employer offers a program in which they match your investments. Try investing even a tiny portion of each paycheck into a 401K program or other account that will allow your money to grow over time.

Another financial concern for singles that many people don’t think about is the high cost of dating. Whether you’re searching for your soul mate or just trying to have some fun, dating costs can add up quickly. The good news is that dating does not have to break your bank. Going to the beach and watching the sunset will do no damage to your pocketbook and is more romantic. Keep your eyes open for free or inexpensive events, such as local concerts and plays. Look into other activities coordinated by your community center. Not only will you save a bundle, but you also may find that you have more fun than you would on a typical dinner/movie date and will get to know your date more quickly and on a deeper level.

Many singles also dread cooking and shopping for one and opt to eat out a lot instead. Not only can this be expensive, but it can also be hazardous to your health and your weight management. Buy foods that have a long shelf life and are quick and easy to prepare.

As you can see, singles have some unique financial needs. However, with a little planning and prioritizing any single person can create a successful financial future for themselves. The key is starting early, getting organized and taking managing your financial future seriously.