What single women need to know about managing their money
You’ve heard that money is power. The greatest money power comes when you have control over your own finances. And you can leverage that power to advance in many other areas of your life.
You may be tempted to push this project to the back burner because, let’s face it, managing money can be super boring. Ignoring your finances won’t make them any better, but tackling them head on will. Your confidence and sense of security will soar when your finances are in better shape, and so will your cash flow.
Getting on top of managing money that comes in and goes out is critical for successful single women. Whether you’re single by choice, waiting for the right partner, divorced or widowed, with kids or without, you face some unique and pressing financial needs.
The fact is more women are choosing the single life. The U.S. Census bureau estimates more than a third of women in the U.S. are now single, either by choice or by circumstance. The number of single adult Americans overall is at a record high as well. The Pew Research Center reports there are more unmarried American adults than those who married in 2014. Consider that back in the 1950s, only 20 percent of Americans were unmarried.
If the trend continues, the ranks of singletons will just keep growing.
Read on for the most important financial advice for women who are single, divorced or widowed, with and without children — and the priority actions you need to take now so that 2016 can be your year of money happiness.
Single women can take control of their financial power
You might be looking for the ideal life partner, be between relationships — or maybe you're not looking at all. Whether you’re single by circumstance or it’s simply your choice, you’re not alone.
As a single woman, you’re probably working — hard. You already have a single mindset about your financial life. After all, it’s your money, and you’re used to handling the bills and making all the big-ticket investment decisions for yourself. Not having a partner has some obvious benefits, including total freedom. No big fights over who blew $1,500 on a sports bet versus buying a new sofa. (And oh, the joys of being able to scarf the occasional dinner over the kitchen sink!)
Singlehood also comes with some not so obvious drawbacks, like not having a second opinion from someone who has just as much skin in the game as you do — someone who shares your goals and might be able to help support them.
The single mindset can be a huge confidence booster, but some trends for single women point to some worrisome money vulnerabilities. For example, women aren't keeping up with men in saving and investing.
Did you know men have 50 percent more money saved for their retirement than women do, according to one 2015 study by mutual fund company Vanguard?
Financial security is more important than ever for the many single women choosing to become mothers on their own. If you anticipate having a child on your own or already have one, you’ll need to think extra hard about your financial security because you are your child’s sole support.
It’s the small acts of saving and investing that play the biggest role in determining if you can live your desired lifestyle or end up a crazy cat lady, and that’s even more urgent for single women. I have your attention now, don’t I?
Four things you really need to know about money as a successful single woman
1. You will need a Plan B, a savings account to carry you through an emergency
If you face an unexpected crisis like extended illness or job loss, you don’t have another earner in the household. So it’s imperative that you sock away money to cover at least six months of expenses. Put this somewhere like a money-market account, where you can access it without penalty at any time. If you’re a mom, make sure you stash money to cover childcare costs if you need to look for a new job or face an illness, plus be sure to pay for your life and health insurance.
2. Don’t let your debt drag you down
Paying off debt is probably the single most important thing you can do to improve your finances. Talk about freedom — every dollar you can pay off enhances your sense of control and confidence in every aspect of your life, not to mention makes a positive impact on your credit score. First tackle high-interest debt, such as credit cards, but also budget for paying off student loans. And don't get in over your head with a bigger mortgage than you can afford. Racking up debt can make you feel guilty.
3. Take the reins on investing for retirement
Single women have to rely on their own resources and can’t lay claim to a portion of a spouse’s retirement income, as married women can. Plus, women now live well into their 80s, which means you need to participate in every company-sponsored and/or tax-free retirement account you can. Make sure to take advantage of any employer matching — that’s free money.
4. You need a Plan A, too
There are many sources of help, ranging from financial planners to so-called robo-advisers (web based) and your own knowledge accumulated by reading and taking courses. I still recommend getting together annually for an assessment of your assets and debts with a qualified investment adviser, someone who charges only a fee versus commissions on stocks or other investments that he or she sells to you. You’ll get feedback on whether you are adequately diversified and on track. This can give you that trusted second opinion.