February.23.11Personal Finance
Money Matters with Nimi

For many single people, financial planning is not a priority as they feel that they have only themselves to worry about. Whilst every one should plan and save towards the future, being single presents some unique financial challenges that must be specially addressed. Your single status means that you are solely responsible for meeting any financial obligations; you may have to face each financial challenge alone, and to make critical decisions concerning your future and retirement plans.

Whether you are single by choice or by circumstance; young and unmarried, divorced or widowed, here are some issues to consider as you manage your money.

Set clear financial goals

If you have set clear short, medium, and long term goals, you will be able to design a financial plan to help you achieve them. If you are young and single, without dependents or any significant responsibility, this is one of the best times in your life to start to save and build financial security. By saving and investing regularly from now, you will be in a better position to meet your financial needs such as owning your own home, and securing a comfortable retirement.

Where does your money go?

Many single people tend to spend beyond their means and admit that eating out and mobile phone bills are some of the culprits that put a severe strain on their budge. Try to keep track of your spending by being more deliberate about making realistic purchasing decisions.

By creating a budget you will have more control over your spending. You should have a clear understanding of where your money is going and how you can best allocate it to fund your financial goals. Track your expenses so that if you are spending more than you make, you can adjust your budget accordingly and reign in any overspending.

Create an Emergency Fund

If you face a financial crisis, you may have only yourself to rely on. You don’t want to be forced to borrow to get through an emergency. A money market account holding about six months of living expenses is advised, but if you can afford it, go up to one year for added protection. You may need to take care of unexpected car repairs, medical bills, or  you could even lose your job; your emergency fund is a safety net, so do not spend it unless absolutely necessary.

Are you insured?

Young, healthy singles often consider health insurance unnecessary; this is a huge mistake. As pessimistic as it sounds, regardless of your age or present state of health, you can become ill, or be in an accident that lands you in hospital at significant cost.

If you cannot afford the most comprehensive plan with a low deductible, at a minimum, protect yourself from potentially devastating financial loss by purchasing a less expensive plan with a high deductible. This means that you will have to pay for the smaller expenses yourself, whilst the large ones that could make a huge dent in your finances, will be covered by insurance. Even where there is a supportive extended family that may be willing or able to help out, it is wise to have a plan in place to help to offset your expenses should the need arise.

Plan for retirement

When you are young and unattached, it is only natural to feel it is too early to save for retirement, yet your retirement plan rests squarely on your own shoulders. If you are not a beneficiary of an employer matched retirement plan, set up your own personal Retirement Savings Account with a Pension Fund Administrator. The sooner you begin to put money aside for retirement the better; if you delay by even just a few years, you could lose much of the advantage compounding brings.

Prepare a will

Many single adults do not realize the importance of having a will.  If you own anything of value such as a home, cars, bank accounts, jewellery, stocks or property, you should have a will specifying who you would like to bequeath your possessions to if you die; relatives, friends, or your favourite charities. Without this, the court will determine how your assets are distributed.
It is easy to avoid thinking about the worst case scenario; no one contemplates being ill for any long period of time or needing to be cared for. If you find yourself unable to make medical decisions for yourself, a living will and power of attorney for your finances and health care will designate someone you trust to make critical decisions for you or carry out your express wishes.

Your financial future will be largely affected by the decisions that you make today. With proper planning while you are single, you may be well established financially by the time you get married and if you do remain single, you can be confident in your ability to achieve the lifestyle and financial security that you desire.

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