While it may be simpler to make choices regarding goals and investments, financial planning for singles is still challenging. Creating a financial plan for one person may be less complicated because there is only one person's lifestyle and financial goals to consider. However, there is also only one person to provide for your all of your financial needs, and that person is you. If something should go wrong and you aren't prepared, you could be in trouble.
Financial experts generally agree that everyone should have emergency savings, regardless of their relationship status, but this is even more important for singles. If unexpected expenses arise, such as car repairs, home repairs or medical bills, being able to pay for them from emergency savings instead of putting them on a credit card or borrowing funds allows you to avoid interest charges and the obligation to pay back a debt. Try to save enough to cover at least six to nine months of living expenses as a basic emergency-savings fund.
Losing your job or being diagnosed with a critical illness is devastating for anyone, but can be particularly difficult when you don't have a spouse or significant other for emotional and financial support. Financial planning for singles should include making provisions for the possibility of these things happening. Consider talking to your insurance advisor about critical illness insurance, which, depending on the policy, may pay a lump sum or cover your monthly living expenses if you're diagnosed with a critical or terminal illness as defined by the insurer.
As a single person, you can take steps to protect yourself financially against job loss by either increasing your emergency savings fund to cover at least one year or talking to your insurance advisor about job loss insurance. Job loss and critical illness insurance may also be offered by your lenders to cover your payments on credit cards, loans and mortgages. This keeps your payments up-to-date should you be unable to make them while you are ill or out of work, and helps keep your credit record score healthy.
Protecting your credit is a particularly important aspect of financial planning for singles, and not just in times of crisis. Making your payments on credit cards, loans, credit lines and mortgages on time is important to avoid damaging your credit history scores. A single person with poor credit may find it more difficult to get new credit because a creditor will not be able to consider additional factors such a spouse's income and good credit history.
Singles can enjoy spending their retirement years doing exactly as they please, but don't forget that your income then will be entirely dependent on the choices you make today. Single saving for retirement may want to choose slightly more conservative investment options than married couples in the same income and age bracket. Remember, you'll be living on just one person's pension and investment income, so any losses due to risky investments won't be cushioned by additional savings or income from a spouse.