When You’re Single You Must Be Your Own Money Manager

Jun 20, 2016

MoneyLife100Being single means you don’t have to answer to anyone. Unfortunately, being single also means nobody is answerable to you. Confused? Well, when it comes to finances somebody has to be accountable, and when you’re single that somebody is you. 

Add the fact that tax burdens are generally higher for single people than married people, and you’ve got to be even more careful with your money. 

The Pennsylvania Institute of Certified Public Accountants offers these tips on how to take the reins of your finances and enjoy single life without having to fret about the future. 

Create a Budget

Budgeting is essential for everyone, regardless of their marital status. It’s even more important, though, when you’re single. 

When creating a budget, it should be as detailed as possible without being overwhelming. Some people find it helpful to track every single penny, while others find it sufficient to track expenses in terms of general spending categories.

Do what’s best for you. If you find it’s too much work to maintain your budget, you’ll just stop using it and that won’t be any help. 

Pay Yourself First 

When you create your budget, be absolutely sure to pay yourself first every time you get paid. Treat your savings as though it's a bill — just like your rent/mortgage payment or your cell phone bill. In fact, treat savings like it’s the most important bill you pay each month. Prioritize it above every other bill.

Set up a separate bank account and have the “payment” transferred automatically into that account. If these funds aren’t in your regular bank account, you’re less likely to spend them. You’ll be amazed at how fast the fund grows without your even lifting a finger. 

Why Save?

Saving will help you build an emergency fund. Most experts suggest you keep at least six months of living expenses in a savings account should you lose your job or can’t work. 

There’s also the expected yet unpredictable expenses. You know that your car and home eventually will need repairs, you just can’t predict exactly when that will happen. It’s important to have money set aside for the unavoidable. 

Similarly, save for holiday, birthday, and other annual expenses. Treat this like a "monthly bill." For example, if you typically spend $240 on Christmas presents, set aside $20 per month.

The whole point of saving is to avoid using credit cards for out-of-the-ordinary expenses. Those interest charges add up fast and can cause a lot of unnecessary stress and anxiety. Who needs that? Plus, after you’ve established an adequate emergency fund, you can start investing for future goals. 

Don’t Forget about Retirement

Whatever your goals — traveling, buying your first home, starting a business — retirement shouldn’t be forgotten. As a single person, how you live after you stop working rests squarely on your shoulders. Social Security alone won’t be enough. Most people today don’t have a pension, so it’s up to you to plan for your future. If you’re young and single, retirement is probably the furthest thing from your mind, but if you delay planning for your retirement by just a few years you can find you’re spending the rest of your working life playing catch up.

Just like an emergency fund, the key to retirement savings is to make it automatic so you don’t have to worry about it. If you have a 401(k) or 403(b) plan where you work, enroll. Some companies will even match a certain amount of your contribution to the plan. Don’t miss out on free money.

These plans are set up so that money is taken directly out of your paycheck before you even see it. If it doesn’t hit your personal bank account, you can’t spend it and you can’t forget to make that deposit.

If you don’t have a retirement plan at work, consider an individual retirement account (IRA). If you’d like to receive an up-front tax break, there’s the traditional IRA. If you qualify and would like tax-free withdrawals in retirement, think about a Roth IRA. 

Whatever retirement “vehicle” you choose, the sooner you begin to put money aside the longer it has to grow, and the better off you’ll be in retirement. It doesn’t matter if you are only able to save $20 a week; something is better than nothing.

Cut Back on Eating Out

Consider this: If you spend $10 each day grabbing lunch or dinner out at a restaurant, you’re spending $3,650 a year. If you spend an average of $25 each day, that’s more than $9,000 in one year! And this is just for one person. If your take-home pay is $35,000 a year, you may be spending more than 25 percent of your income on food.

Eating out is one of the most common forms of entertainment. Unfortunately, it can also be one of the biggest strains on your budget.

Take the time to learn how to cook meals at home. Invite your friends to learn with you. Make it a social gathering. With a little practice you can make great meals for a fraction of the cost. Even if you were to replace two days a week with home-cooked meals, you could save a few thousand dollars each year.

You’re Not Alone

Even though you’re single and solely accountable for your finances, you don’t have to figure everything out alone. Certified public accountants (CPAs) are trusted advisers to many folks, single and married, and they have the knowledge to set you on the right financial path. Visit www.picpa.org/moneyandlife for financial resources including a CPA locator tool, which helps to find a professional by location and area of expertise. 
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