So we all know that one person sitting in a room uses the same value of electricity as two. And a single hotel room usually costs the same as a double. And a single holidays costs more than a twin share.
Single people still succeed in saving though. They also buy their own cars and their own homes. They create stock portfolios and retirement funds. So what issues are there behind the obvious extra costs from a lower total income?
I believe there are two key issues that singles have to understand and deal with financially.
The first issue is the enormity of everything – a mortgage looks much bigger against one income; the risks look much bigger when the loss of one income is the loss of all income. The fear accompanying this is paralyzing.
The second issue is the lack of appropriate advice and information. Most “singles” finance articles are make a lot of assumptions about the demographic of singles. Many of these articles discuss the value of sharing a house or returning to your parent’s home even if it does seem like a small loss of freedom. Great advice for someone in their early twenties but I can’t imagine anyone giving the same advice to my friends who happen to be married with kids and also in their thirties, regardless of how much easier it would make it for them to save money. A second assumption is often that your marital status will not be ‘single’ forever therefore you can expect some financial relief in the future. A nice pep talk but not realistic financial planning.
So let’s look at some simple facts that I believe most singles would benefit from financially –
1. Be realistic about what your income can afford and work towards this. It’s okay to dream big but start your financial plan with your feet planted firmly in reality.
2. Trust mathematical logic – if the sums say you can afford it, trust this. (Although be conservative with your sums!)
3. Protect your income and always have a few back up plans for how you could earn money if your job disappeared. For example, I once had to apply for temp work – everything from answering phones to data entry, each week with a different company. I knew before I started that there was a market and that I had marketable skills so I was prepared. the income wasn’t great but it was better than nothing and kept my fingers out of the piggy-ban while I looked for “real” work again.
3. Know what aspects of your lifestyle you are willing to sacrifice and those you are not. I personally cannot go to live with my parents with save rent money. To me, the money I would save would not be worth the sacrifice of my freedom, independence and dignity. However, I am willing to eat in every night, buy discount groceries and fore go new clothes for an extended period of time if I am saving for something.
Last but not least (the bit that none of us want to hear but really need to) –
4. Don’t base your financial plans on the dream that one day someone will come into your life to share the burden (and maybe bring a fortune with them!). I know most singles have some dream of meeting someone, one day but this needs to be kept well separate from your financial plans. Work out what you can do, on your own, to achieve the lifestyle and financial security that you want and start working towards it. Anything extra that comes along is a bonus.
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