Being single can teach you lots of lessons: how to be independent, how to live alone, how to cultivate good friendships. What women often aren’t prepared for is financial security. Single women have to be even more financially savvy since we carry the load on our own.
So, what should every single woman know about money?
A single woman should have money in the bank.
It may sound like a no-brainer: money is the name of the game for us all, single or not. When your income is the sole income though, it becomes even more important to have a rainy day fund (or you can call it a less delicate name). Gretchen recommends a fund with enough money to support you between 3 and 6 months. What would happen if you got laid off today? Or how able would you be to pay your mortgage if your biggest freelance client suddenly decided they wanted to hire someone in-house instead? Life happens so best to be prepared for whatever comes along.
A single woman should have good credit.
Gretchen says this “is not necessarily being debt free.” Debt is something most of us carry. Instead, she says the focus should be on having credit good enough to make choices. Let’s say your apartment building gets sold and you need to vacate fast, would you be approved for a new, maybe even swankier, place? You decide to make a move to a new city that doesn’t have the public transportation system you’re used to: could you get the deal on the new car you really want?
If you’re not sure, first check your credit score (even more important after the Equifax breach) and see how you could raise that number even just a little higher by paying more on your credit card or by simply divvying up the same monthly payment into weekly payments so you get hit with less interest.
A single woman should have disability insurance (especially female business owners).
When you’re young and healthy, who thinks about disability insurance? Except as you get older and especially when you’re single, you have to start thinking about not only the best of what the future holds but also the worst. Gretchen has a question every single woman should consider: “What would happen if you weren’t able to work?”
Especially if you’re a female business owner and you get injured, there isn’t anyone to do the work for you and there’s no time off from a big corporation. Gretchen reminded me: “Your ability to earn an income is one of the most valuable things you have.” And what’s that you say? Well, you could always borrow some money from your 401k if things really got bad? Classic mistake and one Gretchen has seen happen: “All that diligence to save for retirement, now you’re paying taxes and penalties and your whole lifestyle is up in arms.”
A single woman should have a clear picture of what financial independence looks like.
This one got me doing a lot of thinking. I’m all for goal setting, but I’ve never asked specifically what does financial independence look like for me. Consider whether you might get long care insurance. Women live longer than men and even if you one day get married, there’s no guarantee you wouldn’t outlive a spouse or even kids.Also, don’t wait to get started on that nest egg. Gretchen told me, “Every year you wait is a year you’re not moving forward.”
She walked me through a scenario. If you start saving $1000 a year for the next 40 years, let’s say it earns 7%, you’d have almost $200,000 saved. If you started just five years later, you’d have $138,000. In other words, start as early as possible. Max out the contribution to your 401k and any matching funds from your employer. Small business owners and consultants can also set up retirement funds that can cost as little as $10 a year and can lower your taxes too.
A single woman should have a budget.
It’s easy to think about a budget as just a bunch of numbers, but a budget should really be the answer to, What do you value? The five dollar cup of coffee may be a nice daily indulgence, but if exploring new places is something you value, maybe that $5 would be better put towards your next overseas trip. If every month the numbers aren’t adding up and you have to borrow from family to keep you afloat, how is that showing that you value independence? No one wants to feel restricted in what they can do, but if saying no to spending some money now can get you closer to spending the money on those things you truly value in your life, that trade-off will be worth it.
A single woman should have a financial advisor.
Feeling overwhelmed with all you haven’t yet done on this list? Gretchen also thinks single women should have a financial advisor. “It’s perspective,” she says. A financial advisor can help you prioritize your goals and also help you navigate tricky situations like salary negotiation, moving a 401K after you leave a job, or navigating unanticipated financial changes like inheriting money. Gretchen says “it’s someone in your corner who knows what’s going on.”
Thinking about your finances might be scary and even something you avoid, but take a step back though and ask yourself bigger questions about your goals and your lifestyle. Having a handle on your finances can be the first step to living your best single life.