As the female of the species, unfortunately we’re at a disadvantage; women tend to earn less over their lifetime than men, which makes saving for retirement that bit harder.
That’s why we’ve put together 6 money rules all single women should live by, a series of women’s personal objectives to help you prepare for later life.
1. Stay on top of your monthly finances
Before you can even think about saving anything, you need to get your everyday expenditures under control. This means putting a budget in place, and tracking your spending to ensure you’re staying on target.
There are lots of things you can do to streamline your monthly finances. Shopping around for a more competitive energy supplier is one example. Another is making a note of every single outgoing to see where you can trim down on ‘mindless’ spending – cutting down on a takeaway coffee every day to two a week, for instance.
2. Make saving a priority from early on
The key to building up a good retirement nest egg is to start saving early – making contributions little and often, when you can afford it. A good practice to adopt is the ’50-30-20’ rule. 50 per cent of your monthly income should go on bills and essential purchases, 20 per cent into your savings account, and the other 30 is for fun stuff.
Don’t forget that there are many life milestones along the way to retirement that may result into you dipping into those savings. For example you may get married or start a family, or you may have periods where you’re not working. It’s always better to use the money you’re saving for a rainy day than to borrow or get into debt.
3. Empower yourself with knowledge
However much you manage to save up, you want to make it go as far as possible. Therefore, you need to increase your knowledge on how, where and why to invest.
Some women choose to manage their finances independently, others look to the support of a professional advisor. There is no right or wrong answer – choose the option that works best for you.
4. Get insurance
In an ideal world, everybody should be self-sufficient, however many people in relationships rely on the fact that their partner could theoretically support them in times of difficulty.
One of women’s personal objectives should be to put insurance in place to protect your wellbeing and lifestyle should you suffer a bump in the road. For example, income protection insurance will look after you if you are unable to work – through redundancy, for instance. Equally, there are insurance policies available to offer financial support should you be unable to work through illness or injury.
5. Prioritise your own needs
Many single women, especially those with children, will put the financial needs of others before themselves. While this is admirable, it can cause problems later on in life.
Be prepared to make tough decisions, because they will pay dividends in retirement. For instance, don’t devote your entire savings to funding your children’s university education. There are loans available to support them; that same level of assistance isn’t available to retirees, and while the state pension allowance can cover the basics, you don’t want to work hard for decades only to find you can’t afford to live the life you want.
6. Never give up
If you’re reading this article wondering whether you’ve left it too late to start saving for retirement, the truth is that it’s never too late. While we advocate starting early, today is always a good day to make financial changes.
The worst thing you can possibly do is put off facing the truth about your retirement planning until tomorrow – that’s another day lost. So bite the bullet, crunch the numbers, and start making a difference to your future.
When you need to think about your financial plan, contact us to arrange your own financial review.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
The value of investments can go down as well as up and you may not get back the amount invested.