Flying Solo: 5 Financial Strategies Every Woman Should Know

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have you ever thought “I’m single. Should I do anything differently with my finances?”

  • Do you feel the pressure or the weight of managing your finances on your own?
  • Are you worried about having enough money to take care of yourself?
  • Are you too busy or just haven’t taken the time to think about the “big picture” of your finances?

You’re not alone. Today, there are more women living independently in the United States than ever before. In fact, the Pew Research Center (2016) report that 69% of women live without a partner. Moreover, at some point in their lives, women will end up alone, meaning they will be the sole financial decision makers in their household (CNBC, 2018).

These trends, which do not appear to be reversing, clearly show that single women face particular challenges when planning for the future. So if you’ve never been married, are divorced, or have lost a spouse, it’s imperative that you plan ahead for your personal and financial security. Here are some key strategies to help you protect your financial future and ultimately have peace of mind.

#1: Treat yourself to a cash cushion

For many, it’s not a question of whether you’ll need an emergency fund, but when. The general rule for an emergency account is to save between three and six months’ net pay. However, I recommend six to nine months or more for single women. Why? It can take longer for single women to find that next job or recover from a crisis, which is problematic if they have no other source of income to fall back on or rely on.

No. 2: Make investing a habit

Women have a longer life expectancy than men, but generally have less retirement savings to build a nest egg for their future. So when it comes to investing, start with your retirement contributions first. Make sure you contribute at least enough to get the employer match, if offered – otherwise you’re leaving free money on the table! If you contribute enough to get the match and can contribute more, consider investing in a Roth 401(k) Where Roth 403(b) if your employer offers it to you. This can give you a source of income that won’t be taxed when you withdraw it in retirement. Also consider a Roth IRA or one Health Savings Account (HSA)). An HSA allows you to invest with pre-tax money and withdraw tax-free funds to cover eligible healthcare expenses.

If you have extra discretionary income, start investing for other goals, like starting a business, traveling, or just building your wealth. The sooner you get to this point, the better with the magic of compound interest, that is, earning money on top of the money you earn.

#3: Prepare for the unexpected

An often overlooked financial concern for ALL women is planning for unexpected life events that could derail your finances. These include things like sudden death, disability, long term illness or terminal illness – all of which require serious financial decision making. Because more and more women are engaged in high-paying careers and therefore earn more money, they tend to own more assets, which means they have more financial stakes in the face of unexpected events. . It is therefore important to know what your options are so that you are not caught off guard in the future.

What are the options? In simple terms, it is insurance protection, such as income replacement insurance or disability insurance, life insurance, and long-term care insurance. With long-term care insurance, for example, you may not have a friend or family member to help you if your health deteriorates due to normal aging or medical conditions. which can result in less than optimal care when it is most needed. later in life.

Remember that some of these protections are offered as benefits by your employer. Be sure to take advantage of them if they are provided. If you already have them in place, make sure you have adequate protection, which means reviewing your coverage to make sure you have enough to meet your potential needs. Otherwise, consider increasing your coverage.

No. 4: Get your things in order

Another area of ​​personal finance that many single women (and men) ignore or postpone is getting their affairs in order. Why? They assume that estate planning is for married couples because couples have spouses who are dependent on each other or because couples need to make contingency plans to care for their minor children. But, assuming that single women don’t need to have an estate plan in place is wrong.

For example, ask yourself these questions: “Who would pay my bills if I became incapacitated? “Who will make investment decisions on my behalf?” “Who will make health decisions or see doctors if I am unable to express an opinion? » These are roles that normally fall to spouses. However, an estate plan allows you to ensure your own protection and ultimately sets the stage for someone else to make financial and medical decisions on our behalf if you are not in able to do so.

So please don’t leave yourself, your family or your friends stranded! Add beneficiaries to all your financial accounts. Be clear about your wishes regarding your healthcare decisions and ensure that your administrative affairs will be under control in the future by acting now – while you are still fully operational and competent – to designate someone to handle them for you if you can’t at some point.

No. 5: Improve your financial acumen

Commit to improving your financial knowledge. With the plethora of online resources available, there’s really no reason not to – you just have to take the time to do it. You can start by asking yourself “What financial information would I like to know?” » Try to identify two or three financial topics you would like to learn more about and commit to learning about those topics. If you want to learn more about financial terminology, consider reading online encyclopedias, such as Investopedia. Reading books and searching for financial apps on your smart devices can also help increase your financial acumen.

In short, as single women, the responsibility begins and ends with you. That’s why it’s crucial that you educate yourself about your finances and make wise financial choices. Take the steps to develop an effective plan or strategy today to ensure you have a better tomorrow. Notice, I said today, which means don’t procrastinate. Instead, make the choice to feel empowered by your financial future!

Financial Advisor, Urban Heritage Management

Derenda King is a CERTIFIED FINANCIAL PLANNER™ Professional, Certified Student Loan Professional (CSLP®) and Financial Advisor with Urban heritage management. She also owns College Financial Coach, LLC, which provides financial guidance to families of college students who need help developing a college financing plan and to individuals looking for strategies to pay off their student debt. Before becoming a counsellor, Derenda worked in higher education and is still an educator at heart. She provides comprehensive and holistic financial planning services, with a greater emphasis on advanced academic planning, and is passionate about educating, empowering, and equipping individuals with the knowledge to make more informed decisions. about their money.

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