It’s often said that two heads are better than one when it comes to setting goals and planning for the future. When you’re single, you bear sole responsibility for handling your finances so it’s especially important to make wise choices.
Many single women in the workplace tend to earn less than their male counterparts, but that should never mean they can’t be good money stewards.
If you’re a woman who’s flying solo, here are some tips for keeping your finances on the right track.
1. Embrace Your Single Life Budget
Some would say that diamonds are a girl’s best friend but for a single woman, a carefully planned budget is the best companion. A budget is simply a written plan for your monthly spending but it’s vital to have one so you can keep track of where your money’s going. Ideally, you should be able to account for every dollar, whether it’s for a fixed expense like housing or the occasional splurge.
If you’ve never written a budget before, tracking your spending on a daily basis is a good place to start. This is especially true if it seems like you’re never able to save anything. Seeing what your spending habits are in black and white can be an eye-opening experience and it gives you a starting point for trimming your monthly expenses.
2. Prioritize Savings
When you only have one income to rely on, having an emergency fund in place is particularly important. The extra money can be a lifesaver if you were unable to work for an extended period of time because of an injury or illness. When it comes to how much money you need to save, six months’ worth of expenses is typically recommended but your buffer may be smaller or larger depending on your needs.
Building up your emergency fund takes time so the sooner you start saving, the better. Even if you’re only putting a few dollars out of each paycheck into a basic savings account it’s a step in the right direction. As you take a closer look at your spending, you may find things you can cut out and redirect the money towards your savings.
3. Be Realistic About Retirement
Aside from saving for rainy days, single women also have to give serious thought to their retirement. When your golden years are still decades away you may think you have plenty of time to get started but there’s no time like the present. Developing a solid retirement strategy means knowing what your savings options are and how much you need to save to meet your goal.
If you’re eligible for a retirement plan through your employer it’s a good idea to contribute at least the minimum required to get the company match. When a 401(k) or similar savings plan isn’t an option, you’ll want to look at a traditional or Roth IRA. These plans offer some tax advantages for savers and they’re an easy way for women to start beefing up their nest egg.
This is especially an issue for women because of longer life expectancy, in addition to the facts that women are more likely to hold part-time jobs that don’t offer employer retirement plans, women are more likely to interrupt their career for family commitments and women generally invest more conservatively than men.
4. Don’t Forget About Insurance
Life insurance is designed to provide some financial security for dependents when someone dies but just because you don’t have a spouse or children doesn’t mean you don’t need it. If you have debt, you’re financially responsible for an elderly parent or you simply don’t want anyone else having to pay for your funeral expenses, life insurance covers you in all three scenarios.
The younger you are, the cheaper life insurance will be, especially for women who don’t smoke. Term life policies stay in place for a set period of time but they’re usually cheaper than whole life, which is permanent insurance. If you’re relatively healthy, you should be able to get peace of mind for as little as $30 a month.
5. Protect Your Credit
Buying a car or a home as a single woman isn’t impossible but it isn’t necessarily a cake walk. Maintaining a high credit score can make getting approved for a vehicle or mortgage loan much easier and it gives you the best shot at securing a low interest rate. If you’ve got credit card debt or student loans, paying them off can give your score a serious boost. You also want to make sure you’re paying all your bills on time each month since just one late payment can cause your score to take a major hit.
Carving a path to financial freedom as a single woman certainly has its challenges but it’s achievable if you’ve got a plan. These are just a few things you’ll want to keep in mind (no matter your gender!) as you work toward short and long-term financial goals.
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