As a single woman, when it comes to your personal finances and your financial success, you alone are entirely responsible for it and that includes building long-term wealth for your future self.
If there is no dual household income or spouse or significant other's income to fall back on, it's important that you have your finances in order. Even if you intend to get married or plan to manage your finances jointly with a significant other, it's still important that you have a firm handle on your finances on your own, beforehand.
"What it all boils down to is this - No one can care about your financial future more than you!"
Being single, you may benefit from the fact that you have no one to take care of e.g. no kids, no husband etc but at the same time it's also necessary to keep in mind that you may not have anyone to take care of you in the event of an emergency or in your old age.
That being said, let's discuss exactly what you should have in place for your finances if you are a single woman.
1. Go the extra mile with your emergency savings
The typical recommendation for emergency savings is 6 to 12 months of your essential living expenses. However, if you are single and on your own, it's a good idea to have a larger buffer for instance, 12 to 18 months, in the event that you are not able to rebound as quickly as you'd like from a job loss or financial crisis.
If you have no other source of income, then you want to make sure that you have a nice "cushy" cushion to fall back on (If you have kids, be sure to include their essential needs in your emergency savings as well).
2. Get disability insurance
If you are single and employed but unable to work for whatever reasons e.g. health issues, surgery etc your entire source of income could be jeopardized if you need more time off than what your work leave policy allows which is why having adequate disability insurance is critical (especially if you are a single parent). If your employer offers both short and long-term disability, take it.
Having disability insurance in addition to your emergency savings will be a solid buffer that can help you weather a difficult time. You can also get disability insurance outside of your employer at a premium but if it's something your job does not offer, it may be worth looking into and seriously considering.
3. Start saving for retirement ASAP
Whether or not you decide to get married or manage your finances with a significant other in the future, saving for retirement early (starting right now) is key. You'll be able to take advantage of the time that you have as well as the power of compound interest.
If you do settle down with someone else then you'll have more money put aside for your future from the combination of your portfolios, however, if you don't, you'll wind up just fine, if you've been savings on your own. Also keep in mind that on average, women live longer than men so you will need more money for yourself long term.
Start by contributing to your employer-sponsored retirement savings accounts and/or to IRAs with a goal of maxing out your contributions if possible.
4. Fall in love with budgeting
Make your budget your BFF...for real. Find a budgeting style that works for you and put it into practice each month. Budgeting is great practice to master your money because it will help you with tracking your income and expenses and planning out your savings and investments.
In a relationship or planning to settle down?
- 64% of single women said financial stability is the second most important characteristic in a partner (right behind honesty/integrity 82%)
- 55% of single women would prefer to disclose financial baggage when a relationship becomes exclusive vs. only 47% of single men
- 52% of single women said, “being controlled by a partner when it comes to financial choices” is a deal breaker vs. only 32% of single men thought this was an issue
These are all critical aspects of money in a relationship and it also highlights how important it is for you to have your finances in order as well (or have plan to get them in order) when you are approaching the topic of money with your significant other.
What it all boils down to is this - No one can care about your financial future more than you!
What key things have you implemented in managing your personal finances as a single woman?