When you're single, money management has a number of incredible benefits. Being single gives you more choices in terms of how you may spend and save your money.
But it's crucial to follow a budget, increase your retirement savings, pay off debt, and lay the groundwork for a secure financial future.
You can also devote more of your income to savings if you don't have children or a significant other. Similarly, you can start working toward important objectives like raising your credit score and creating an emergency fund.
Your singlehood is a time to prepare yourself for the future you want, whether that includes property, a family, international travel, or financial independence and early retirement.
There are several advantages and drawbacks to managing money as a single person.
A key benefit is that you have an overall say over your finances. You have complete freedom and control over your money and do not need to consult with anyone before you can budget or spend. You can also restructure your budget to hit any savings goal you create quickly.
However, it's not all rosy as you shoulder all the responsibilities and accountabilities regarding your finances. You might also overspend due to the lack of an accountability partner.
Read Also: 5 Must-Have Money Management Skills
Budgeting is a critical tool that helps you track your expenditure. It also controls how you spend your money. But it can only be effective when you strictly stick to it.
If you are single and have multiple sources of income, the first step would be to add up all the money you expect, say monthly. Secondly, create a category that specifies the expenses. Next, subtract all the costs to see how much remains in your account. This type of budget helps you see how much you bring in each month and how much goes out.
How do you stick to your budget? One of the ways your budget serves you well is by tracking your expenses regularly. You can do a weekly, or even biweekly review to see if you are sticking to your financial goals. If you have an accountability partner, they can motivate and encourage you to stick to your budget.
Read Also: 8 Amazing Benefits of Tracking Your Spending
As an individual, you need to work towards something specific in your life. If you have savings, you can quickly achieve short-term, mid-term, and long-term financial goals that could make you financially secure. Creating a budget restricts you from floundering and splashing your money, and instead, boosts your savings.
The advantage of being single is that you can set your priorities and stick to them because not so many things are contending for your time and attention.
Read Also: The 9 Most Important Reasons to Save Money
An emergency doesn't discriminate against your relationship status. It just happens, and you need a backup plan to carry you through that job loss, sudden illness, or car repair issue.
Personal finance experts say singles require an emergency fund more than any other group because they are solo and often have to rely upon themselves in case of unexpected expenses.
And since you can never tell how long an emergency might last, the rule of thumb is to stash away savings that could help you carry on for 3-6 months.
Financial experts recommend four types of insurance coverage for singles. These include Health, Life, Vehicles, and Long-term disability insurance covers.
Besides providing security, insurance helps spread risks. It also teaches a savings culture in individuals who have to pay their insurance provider premiums until a policy matures and they get their lump sum.
Read Also: Money and Me: Insurance, a True Life Saver
To be financially savvy and secure, you have to develop new money habits. These include budgeting and avoiding bad money habits such as impulse buying, unnecessary borrowing, and overspending.
Collaborating with an accountability partner who encourages you on your financial journey might be what you need to stick to your goals.
An accountability partner is an individual who works closely with you, keeping you in check and ensuring you are accountable. They provide valuable support and advice, accompanied by honest feedback.
The trick is to look for someone reliable with proper financial discipline. The partner can be a mentor, a professional financial counselor, or a colleague. Even a family member or friend can be your accountability partner if they have the qualities.
It can be stressful if you are solo with piling debt because you have no one else to support you. But that shouldn't stop you from completely getting out of debt and reclaiming your financial freedom.
One of the ways to get out of debt is by readjusting your budget to free up some funds that should go towards debt resettlement.
You can also refinance your loans, consolidate them and commit to a repayment plan with one lender. Another excellent strategy to be debt-free is to use any windfalls to pay off your balances as quickly as you can.
Once your debt repayment is under control and you have set up a robust emergency fund, you might still have that disposable income in savings. Typically the next step is to invest your cash to help you create wealth.
To hack it, categorize your savings and investment plans into short-term and long-term goals. Each situation is unique, and there isn't a standard investment plan. However, you can keep your cash in low-risk, high-yielding accounts to earn you a decent interest in a few years.
You can also invest your money in stocks, bonds, or even real estate. The key is to grow your asset and wealth portfolio by diversifying and spreading risks.
When you are young and possibly single, retirement is like a mirage. But years can fly by fast; before you know it, you are old, with too many responsibilities.
Saving for retirement doesn't have to burden and overwhelm you. If you are employed, you can automatically use the employer pension plan. You can also routinely stash a small percentage outside of your employer account.
Read Also: How to Plan for Retirement
More often than not, career growth reflects lifetime earnings. And when you are single, with fewer distractions, it's the perfect time to build yourself a future.
You can take advantage of career development and learning opportunities within and outside your organization to build your skills and climb your career ladder. You can save and invest more with the additional higher pay.
Read Also: 8 Career Habits to Master in Your 20s
Being single has its highlights, especially if you do not have dependents. You can easily commit a good percentage of your income to savings. But it can also be hectic because you need someone to split the bills. You can also lose track of proper financial planning because you need an accountability partner. The above money management tips can help you streamline your finances to help you meet any financial goals you create.