“It’s so easy for you to take care of your finances – you’re single.”
“It’s easier for you because you don’t have any financial responsibilities.”
“It’s so much harder to deal with money when you are married – you are so lucky to manage your money on your own.”
Have you heard these phrases? I know I have heard them more than once in my life. I used to believe them. Then I got angry when people would say them to me. And then I realized how clueless people are when it comes to understanding what singles go through when they are managing money on their own. It’s not easier than when you are married; there are just different challenges that you face when you are single.
Over the years I have developed three main pillars of personal finance that are especially unique to single people. I call them the Three Ps (or Pillars) of Personal Finance for Singles. Each pillar represents a part of personal finance that singles face when managing their money. And while some of these pillars may hold true for married couples, I wanted to describe how each one pertains to singles in particular.
Paradox of One. This first pillar refers to what I call the Paradox of One. How many times have you been told that it’s so much easier to manage money when you are single? Probably too many times to count. The truth of the matter is that managing money as a single person is just as tough as when you are married – we just have different struggles. While it is true that we don’t have anyone else telling us how to spend our money or having to be on the same page with our financial goals, we also don’t have someone to HELP us not spend our money foolishly or a built-in confidant to discuss personal finance goals. It’s a double edge sword as a single person. While there is freedom to do with your money whatever you want, there is also the struggle of being the only adult making decisions about what to do with your money.
Protect Your Income. Protecting your income is a big deal for all walks of life but especially someone who is single. When I talk about protecting your income, I am not talking about life insurance. Unless you need funds to cover your final burial costs, in many instances, life insurance is not necessary (more on that in a later post). What I am referring to is long-term disability insurance. As a single person, you are the only one generating income to take care of yourself. What happens if suddenly you have a life-altering event where you cannot go back to your job and you need ongoing medical care? Who is going to take of you financially? If you think it can’t happen, think again. At a former employer, one of my co-workers was an expat in the Netherlands. She was riding her bike to work when a tram hit her. She had to endure months of rehabilitation and suffered permanent brain damage. Thankfully, she had great long-term disability coverage that has been able to provide her income and medical care. It was truly a financial lifesaver for her so that she would not be a financial burden to her family when they were going through such a horrible ordeal.
Prepare for The Future. This is a topic that no one wants to talk about but will/may happen to all of us and we need to prepare for. What happens if an accident happens and your family or friends need to access your personal information if you are lying unconscious in a hospital bed? Worse yet, what if you unexpectedly pass away and your family or friends need to go through your records? Would they be able to easily do so? You need to plan ahead so that if something were to happen where you couldn’t communicate, your family or friends would know where to find vital information (at the minimum, a will!) for your care or your final wishes. It doesn’t and shouldn’t be just anyone that you provide this information. Find someone in your circle that you trust with this information. Have a designated spot in your home where these important documents are stored and communicate that location with your designated person. It will make a crisis situation that much less stressful and will provide you and them the peace of mind that the information is available if needed. Be respectful of your family and friends by having a plan in place.
What are some special money issues for singles when it comes to personal finance? Drop your thoughts in the comments below!