Financial Planning for Singles
Responsible Money Management

Financial planning for singles is a topic that few financial advisors cover, and yet responsible money management is important at every age and stage of your life. Find out what you should be doing now to protect your future.

Life as a Single

Being single means having a lot of freedom, and that includes the freedom to control your money—even if there’s not a lot of it. While it may not seem like it now, the financial decisions that you make today will affect your future—from tomorrow all the way to your retirement. Are you making the right decisions for your future? You probably are if your financial plan includes the following elements:

An emergency fund- Everyone—single or attached—needs an emergency fund. This is the money that you’ll use to cover unexpected car repairs, medical expenses, job loss and any other unplanned expenses or loss of money that happens to come your way.

Three months living expenses in a savings account is a good starting point if you are renting and are employed by someone other than yourself. Move up to six months living expenses if you own your own home or are self employed—and consider going up to one year of living expenses for added protection.

A savings account- A checking account is important, but so too is a savings account. Set up at least one savings account and use it to save for long-term expenses such as new furniture, vacations, the down payment on a home, etc.—basically any large one-time expense that you are able to plan for. If it helps you to stay organized, open up a separate account for each expense: say a vacation account and a home account. Then, set up a schedule for making regular deposits into your savings account/s, and stick with it.

Retirement account- If you are over the age of 21 and working for a company with a retirement plan, you need to participate. Depending on where you work this could be offered to you in the form of a 401-K, an SEP-IRA, a Simple IRA or some other investment vehicle. Get all of the details about your company plan, and then sign up. If your company offers contribution matching, try to contribute enough to take full advantage of this benefit.

After you get your retirement account set up at work, you should also look into setting up an IRA for yourself. This can be either a traditional IRA or a Roth IRA, depending on your personal goals. Just pick the financial institute that you’d like to work with, and they’ll walk you through the process.

Once your account is in place, try to stick to yearly contributions—even if you can only afford to do a small amount. The earlier you start saving, the more interest your money will earn, so even small amounts can be extremely beneficial.

Not sure you can come up with the money to contribute to your IRA? Just get in the habit of using your yearly income tax refund to fund this account, and your contributions will be painless.

Start Planning Now

Planning for your financial future doesn’t have to be complicated. Start planning for your future as a single, and you’ll be better prepared for all of the other stages of your life.
 

~Erin Huffstetler

Erin Huffstetler, a freelance writer specializing in frugal living tips and tricks. Her work has been featured in numerous print and electronic publications including, Family Circle, Parents, Pregnancy, Guideposts for Kids, Sweet 16 and Girls' Life.