One of the perks of being single is that you can spend most your money on yourself. But you also have sole responsibility for budgeting, investing, saving for a rainy day, and preparing for retirement, since you can’t rely on your partner’s income when times get tough. In this article, we discuss ways for you to manage your finances, achieve your goals, and create a comfortable future.
Determine where you stand
If you check your account balance at the end of each month and wonder where your money went, you’re not alone. Most of us use a mix of credit cards, EFT payments, bank transfers, and direct debit. With money flowing in and out from so many sources, it can be hard to keep track of it all. But if you want to create a budget, you need to know what your expenses are so that you can trim the fat.
For a month, either write down what you spend or go over your bank statement. Aside from essentials, like rent and utilities, where did you spend most of your money, and what can you cut back on?
Create a Budget
We all have different interests and lifestyles and everyone budgets differently. The important thing is to keep your budget flexible and realistic. If your budget only leaves you with a buffer of $5 each month, then it’s probably not realistic. Similarly, if you plan to track every apple and chocolate bar you buy, you probably won’t stick with it.
Instead, try breaking your budget into broad categories. For example, you might want to spend $50 each week on groceries, and it doesn’t matter what groceries you buy each week, as long as you keep it under $50.
Save for Retirement
Though retirement can seem far away, the sooner you start to plan for it, the better off you’ll be. Compounding earnings on your retirement savings can double or even triple your money if you invest it for long enough. So, the earlier you start a retirement savings account, the more time your funds have to grow.
Contributing to certain types of retirement accounts can also save you tax. It’s a good idea to have a chat with your accountant to make sure you’re setting up the right type of account.
Build Your Emergency Fund
If you can afford to, put aside some of your pay each month for emergencies. Try to build it up until you have at least 2-3 month’s salary so that you can use it for unexpected, big expenses, like your car breaking down, or if you need to take unpaid sick leave. Because you may need money at a moment’s notice, it’s best to keep it in a cash account or some other investment that’s easily accessible.
Educate yourself
There are a huge array of financial books and economic news sources out there, but not all of them are legitimate. It’s critical that you always consider the source of your information. Is it a publication that you can trust that uses reliable sources? Is the author a self-proclaimed financial guru or someone with financial qualifications and years of experience?
Create a goal (or more than one)
One of the most important things you can do to manage your money is to set non-financial goals in addition to your financial goals. Do you want to own a home, take a huge overseas trip, or start your own business? Make sure you include some short-term goals that you can achieve easily, such as buying an expensive outfit or going away for a weekend.
When you’re trying to save money, having something wonderful to look forward to is much more motivating than trying to reach some arbitrary dollar figure. It takes the focus away from what you are giving up by budgeting and instead reminds you of what you stand to gain.
Build your credit score
Having a good credit score makes it easier to get a loan with a low interest rate. Potential employers and landlords may also check your credit history.
The good news is that you get one free credit report each year so you can see your score and know where you stand. To improve your score, try to pay off as much debt as you can, and pay bills and credit cards on time. It may take a few months, but your score will improve.
Consider a side hustle
If you are thinking of taking a second job, remember that working more than full-time can affect your wellbeing, your performance at work, and your relationships. If you can, look for work that brings you joy and energizes you instead of draining you. Play to your strengths. If there are specialized skills you use at work, could you also use those abilities elsewhere without breaking anti-competitive clauses in your contract?
Prioritize Debt
When you have no dependents to support, you’re perfectly placed to reduce your debt. Being in debt can be very stressful, and paying it off feels great because that’s when you can start saving for the fun stuff.
Always pay off the debt with the highest interest rate first since compounding interest adds up fast. If you find yourself juggling various repayments, consider consolidating your debt so that you only have one loan to manage.
Develop Healthy Habits
Being fit and healthy not only has a lot of personal benefits, but many financial ones as well. For starters, you’re likely to have fewer medical expenses and fewer unpaid sick days. People who have healthy lifestyles tend to perform better at work making them more likely to get a bonus or pay rise. They also save money on life insurance since health insurers and life insurers give better deals to healthy individuals.
The Bottom Line
When you’re single, independent, and self-reliant, it’s up to you to take care of your health and manage your money. The great news is that these few simple steps can help you lead a comfortable lifestyle and achieve your goals.
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