Financial management becomes easier when there’s a team (for example, a married couple) involved. This is because often the responsibilities are shared between spouses, which make expenses and savings, both, easier to manage. However, for single individuals, rather single women, financial management can become a very tedious task. The goals of these single women don’t fit in the usual financial planning structure. In the traditional financial planning structure, you can easily identify goals based on life stages. As a single woman, it’s critical to start saving and investing as early as possible.
According to census data, between 2001 and 2011, there was a 39% increase in the number of single women, and the 74.1 million single women in India never married, divorced, separated, or widowed comprise nearly 12% of the female population in our country.
7 Financial Tips for Single Women
Being single, you may benefit from only having to take care of yourself (if you have no kids). However, keep in mind that you may not have anyone to take care of you in the event of an emergency or in your old age.
The following are the 7 financial tips for Single women:
1. Have a Planned Budget
The first and the most important part of any effective saving plan is to have an efficient and realistic budget in place. Keeping track of real-time expenses and your income is a habit you simply cannot afford not to have. An efficient budget will ensure that you do not spend beyond means and actually, are able to save efficiently. This will further help your savings corpus grow effectively over time and help you deal with unexpected emergency situations with ease. Savings, after all, are the first step towards true financial independence.
2. Irrational fear of Equity and Debt
Many retail investors, including single women, fear investing in equity. For single women in particular, the problem may also be that of mindset—equity is seen as an “investment” and not “asset”. When you buy gold or jewelry, you don’t think of it as “investment”; it becomes an asset that you own. Think of equity similarly. This will help avoid missing out on good long-term wealth building opportunities through the equity route.
3. Prepare for the Unexpected
A commonly overlooked financial concern for ALL women is planning for unexpected life events that could derail your finances. These include things like sudden death, disability, a long-term illness, or a terminal illness – all of which demand serious financial decision-making. Because more and more women are engaged in high-paying careers and are therefore earning more money, they tend to own more assets which mean they have more at stake financially when faced with unexpected events. So, it’s important to know what your options are so that you won’t be blindsided in the future.
4. Emergency Savings
The typical recommendation for emergency savings is 6 to 12 months of your essential living expenses. However, our advice to single ladies is to have a larger buffer.
Twelve to 18 months’ worth is a good start. It should be enough to cover you in the event of a job loss or financial crisis such as housing challenges. If you have no other income source, you want to make sure that you have a nice “cushy” cushion to fall back on. If you have kids, be sure to include their essential needs in your emergency savings as well.
5. Know more about Tax
Chances are, if you are salaried, you have a professional handling your taxes. However, it is equally important for you to stay abreast with the latest tax updates and find out about tax deductions which are applicable to your current status.
Tax deductions play a vital role in your overall savings and can boost your investment plan, as well. So, even if you have a highly acclaimed tax professional at your service, it is important for you to be knowledgeable about the latest tax reforms.
6. Start Saving for Retirement
Whether or not you decide to get married or manage your finances with a significant other in the future, our advice for single ladies is to start investing for retirement as early as possible. You’ll be able to take advantage of the time you have as well as the power of compound interest.
If you do settle down with someone else, you’ll have more money for your future from the combination of your portfolios. However, if you don’t, you’ll wind up just fine if you’ve been saving on your own.
7. Keep track of your Expenses
It is important to keep track of the smallest expenses. Even if you are busy and do not see the benefit of this exercise, you must never avoid it. Knowing how and where the money is being spent is the first step in planning your finances. Consistently tracking your expenses will help you identify where you may cut-down and start saving more.