The single stage is the best stage to make necessary preparations for the journey ahead, though this comes with some unique financial planning challenges. There are a few things you need to keep in mind. Since you’re the only one earning income and you still have bills to pay, you need to be sure that you’re making the most of what you have when there’s not a partner to fall back on.
Create a Budget
Budgeting is essential for anyone regardless of their situation, but it’s even more important when you’re single. Every money you make should be accounted for, and you need to have a clear understanding of where that money is going and how you can allocate money to fund your financial goals.
You don’t have to spend all the money you make monthly, you have to set aside money to save and also invest. If you’re in a situation where more money is going out than coming in, it’s time to adjust your budget accordingly. That means reducing or eliminating any non-essential spending. But what if you don’t have a budget? The first step is creating one.
Save for Retirement
Your retirement rests squarely on your own shoulders when you’re single. It’s up to you to plan for your future. If you’re young and single, retirement is probably the furthest thing from your mind, but if you delay planning for your retirement by even just a few years you can find you’re spending the rest of your working life playing catch up.
The key to retirement savings is to make it automatic so you don’t have to worry about it. If you don’t have a retirement plan at work, you need to set up an Individual Retirement Account. The sooner you begin to put money aside, the longer it has to grow, and the better off you’ll be in retirement.
One of the drawbacks of being single is that if a financial crisis comes up, it’s up to you to solve it. This is why it’s so important for someone who is single to have an emergency fund.
The last thing you want to do in an emergency is turn to credit cards or take on more debt just to get through it. This can only make matters worse. So, if you can set aside even a little money it can help you when something does come up. Just like with saving for retirement, the best way to create an emergency fund is to make it an automated process.
(c) The Balance