BY: Cara Gober, J.D.
AVP, Trust Officer
Oxford
A growing number of single women in the United States are childless by either choice, circumstances or challenges. This group, affectionately known as PANKs — “professional aunt, no kids,” an acronym coined by author Melanie Notkin — numbered roughly 23 million in 2012, or 1 in 5 American women. The PANK lifestyle is increasingly popular for those of us who enjoy spending time and money on our nieces and nephews, yet take our professions seriously and put them first. There is freedom to being a PANK, but there are also challenges — we can use our resources for family and travel, but are also entirely responsible for our financial futures. That’s why, for single women, it’s important to have a savings and investment plan and to start as early as possible.
Whether you are middle-aged, never married, single again, or a young woman with hopes to have a partner in the near future (a man is not a financial plan!), it will benefit you to plan your financial life as if you’ll remain single. Plan for financial security and flexibility regardless of your relationship status. That way, whether your plans come to fruition or you enjoy remaining single, you will have made responsible steps to achieve a financially prosperous future.
Financial literacy is one of the main concerns inhibiting single women from thoroughly planning their financial future. But it doesn’t take a finance degree to understand some of the basics about saving and investing. Having been there myself, I thought I’d pass on what I’ve learned over the years.
Budgeting and reducing debt
As with almost everything, a plan is the best way to start. As part of your plan, you must create a budget and put it into practice each month. Relying on a single income to cover the monthly bills might be more challenging for single women than for married couples who each have jobs, but on the other hand, you have complete control over your financial decisions. Budgeting is an excellent way to know your earnings, help you track your income and expenses, and set aside money for savings and investments. It may help you begin to understand your finances!
Many apps will help you create a budget and track your expenses, or you can use an old-fashioned Excel doc — whichever method ensures you’ll do it, go with that one.
Something else to plan for is how to get out of debt. More than anything else you do, reducing your debt to zero is how you attain true financial freedom. Your first step should be to pay down your highest-interest debt, then gradually tackle the rest. The longer you live with debt, the harder it can get to muster the energy to face it head-on. In addition to lowering your credit score, having debt can affect your ability to accumulate savings, live comfortably and retire at a time of your choosing.
Without a portion of your paycheck going out the door each month to pay interest on your loans, you’re able to cover your normal expenses more easily and, hopefully, have some money left over. Initially, facing your financial situation can be difficult, but creating a debt payoff strategy will help you plan and motivate you to become debt-free.
How single women can save for the future
When looking at methods of saving, start with your employer. They probably already offer a variety of ways to assist in your retirement savings. Like many women, you’ve seen all the terms but are intimidated and confused by all the various financial plans that combine numbers and letters without seeming to spell anything — 401(k), 403(b), IRA, HSA.
If your employer offers a 401(k), sign up, and make sure you’re contributing enough from your paycheck to receive a matching percentage from your employer — not taking advantage is like turning down free money. By setting up automatic retirement plan contributions from your paychecks as soon as you start with a new employer, you never see that money in your bank account and will barely realize that it’s been taken out. Just make sure that you increase your contributions any time you get a raise or bonus.
Whether or not you decide to get married or manage your finances with a partner in the future, single women should start planning for retirement as early as possible. If you set money aside now, it will keep growing throughout your life, no matter what the future holds.
Investing 101
Being single can be scary when investing money independently. Because you’re responsible for yourself, you might feel hesitant to take financial risks without another person to depend on. But looking at your situation another way, you actually have a greater degree of freedom because you don’t have anyone else to worry about. As a result, you can take chances others may not be able to — within reason.
At Argent, our advisors can help assess your individual financial goals and develop a plan for you to start investing in a way that works around your personal circumstances. As a fiduciary, we put your needs first and focus on helping you grow and protect your wealth.
One of the simplest, lowest-cost ways to enter the market is to invest in mutual funds or exchange-traded funds (ETFs). Both of these financial products bundle together a large number of individual stocks, bonds or other investments, giving you access to a broad section of the market while reducing your risk.
If you set up an automatic withdrawal from your bank account every month to be invested in the market, you’ll be surprised how painless it can be to start accumulating money. Basically, like with the 401(k), you can set it and forget it.
Expecting the unexpected
Beyond retirement savings and other investments, it’s also important for single women to have a “rainy day” emergency savings. In other words, expect the unexpected. For most people, it’s not whether you’ll have an emergency, but when. Plan for unexpected life events — and know your options, so you won’t be blindsided. Two ways to plan are to have disability insurance and an emergency fund.
Having adequate disability insurance is critical, especially if you’re single and employed, but aren’t able to work and generate income because of a long-term health issue. If your employer offers short- and long-term disability plans, take advantage of both. If not, check into the costs of obtaining your own and seriously consider doing it. You can compare quotes online from various insurance platforms or ask your local insurance provider.
The combination of disability insurance and emergency savings can be a solid buffer to help you weather a difficult time. But single women’s financial planning should also include other common types of insurance, such as homeowners or renters, life and auto.
If you come to a point where you have no other income source, you will be glad you saved enough to meet your needs. While the typical recommendation is to save enough in an emergency fund to cover six to 12 months of essential living expenses, my advice to single ladies is to have a larger buffer. Why? It can take single women longer to find that next job or recover from a crisis, which is problematic if we have no other source of income to fall back on. A fund covering 12 to 18 months is an excellent amount to cover you in the event of a job loss, financial crisis or health challenge. This money should remain untouched except in a real emergency, so you never have to worry about being able to pay for it.
Plan the life you want
Once you know you’ve prepared for nearly any unexpected setback, you can start dreaming big. What do you want out of life, and what will it realistically cost? What do you do when that perfect life slips you a curve ball? Create a plan.
To pursue the lifestyle you desire, put a financial support system in place that’s grounded in reality. After creating a realistic budget and paying down your debts, begin saving and investing in your future NOW. Remember, the most important thing you have is time, so putting money away now will only benefit you later and put you closer to your financial goals.
Don’t wait for the perfect partner to figure out how and when you’ll be able to afford it. It doesn’t matter how much you’re investing; what matters is how long you’ve been investing.
By all means, be optimistic and hope for the best. But make sure you also prepare for the worst, since life rarely unfolds the way you expect it to. This mindset allows you to live your everyday life without the stress of worrying about how you’ll take care of yourself in the future.
If we all planned our financial lives under the assumption of staying single, I wonder if we might be better off — regardless of how our respective love lives unfold.
How Heritage can help
Women|Wealth|Wellness initiative focuses on serving the needs of women with fiduciary-based wealth management strategies. If you’d like assistance in reaching your financial goals, give us a call at 877-887-8899 or stop by our office nearest to you.
