Tips on Setting Money Management Goals for Singles
Be Strategic With Life Insurance
Conventional wisdom says you don't need as much life insurance when you are single, since you don't have anyone who depends on your income. Not so fast, says insurance claims specialist Deborah Belknap. "While you might not need the same amount of life insurance as a person who is married with children, there are plenty of reasons to get your life insurance in place, regardless of your marital status," she says. "Getting insurance while you are young and healthy helps protect your ability to maintain your life insurance policy later in life. That could be important if you happen to get married in the future. Just because you're single doesn't mean you don't have someone depending on you, such as a child, sibling or parent." Belknap notes that having the appropriate level of life insurance can be an important estate planning tool, and in some cases can help provide income during your retirement years.
Deal With Debt
Nearly 69 percent of all Americans are in debt. Student loans, car loans, credit cards and your mortgage can start to pile up and become unmanageable, even if you're in your prime earning years. When you're single, you don't have another person's income to draw on, so when it comes to dealing with debt, you're on your own. Start by creating a budget so you know how much money you have coming in and how much you have going out. Determine to spend less than you make each month, then attack your debt by concentrating on one bill. It can be either the one with the smallest balance, so you can pay it off faster, or the one with the highest interest rate, so you save money in the long run. Once you pay off that debt, add the amount to your next bill and repeat the process until you're debt-free.
Prepare for Retirement
You can expect to live 20 years or more after you retire, and since you don't have a spouse to help add to the retirement nest egg, it's a good idea to plan for your golden years while you are still young. The sooner you start, the more money you'll have available once you hit retirement. Your employer might offer a tax-advantaged retirement program, such as a 401(k) plan, or you might contribute to a individual retirement account. The primary difference between planning for your retirement as a single is you don't have a spouse's well-being to consider after you pass on. How much you need to set aside depends how long you have before you retire and how much you want to accumulate before then.
Pay Yourself First
The old financial advice of "Pay yourself first" is commonly applied to saving a portion of each paycheck before you pay any of your other bills. While this is sound advice, this is not its only application. As a single, you might find yourself in the position of helping support your aging parents or your children, even after they have moved into adulthood. Think of the safety instructions on an airplane. There is a reason that during an emergency, airlines insist you put on your own air mask before you help your children put on theirs. You can't help someone else if you are incapacitated. Take care of your own finances first, then you'll be better able to assist others.