Proactive financial planning if you’re single

Top five tips to help you have a happy financial future if you rely on a single income.
financial planning

With data from the Office of National Statistics showing that the number of single people aged 50+ has increased by 57% over the last decade (2006-2016)[i], coupled with an increasing number of over 65s divorcing[ii], there are an ever-increasing number of people facing the prospect of retirement and old age on their own.

But what does this mean for your financial situation? 

While there can be many benefits of being single, it can come with extra financial pressures. Without the benefits of shared outgoings and expenses, and with no second salary to rely on should you find yourself ill or made redundant, it’s even more important to get the basics in place to protect yourself.

It means that those who are single, or those who suddenly find themselves facing retirement alone, should be extra vigilant around financial planning. 

Planning for the worst can help protect your future

Always aim to protect your position – you might need a fall-back. It is important that you weigh the risks a sudden change in circumstance could have and begin financial planning if you’re single. You should aim to have an emergency pot of at least six months’ salary saved, that you can access should you need it. This works if you’re single, married, or with children, as it is based on the expenditure your salary would usually need to cover.

It is also a good idea to establish some form of income protection to help you further if you should need it.

Get into the saving habit

Get into the habit of saving now, to help you in the long run. Once you’ve built up your savings buffer you’re in a better position to consider investing too, so your money has a greater potential to grow. You can invest up to £20,000 each year, into a tax efficient ISA. These are investment accounts that let you put your money into cash and/or different types of investments such as stocks and shares. Of course you should keep in mind that investments can always go down as well as up, and you could get back less than you invested.  

Take stock of your pensions

These days most people have several jobs throughout their lives, and multiple career moves mean many of us end up with numerous pensions along the way. But having multiple plans with different providers can make it difficult to work out exactly how your pensions are performing.  You should consider what charges you are paying and, ultimately, whether you are saving enough for the retirement you want. Bringing all your pensions together is one option you could consider, but you would have to think very carefully about whether that was the right option for you. If you are considering merging some or all of your pensions together, first check to see you won’t lose any valuable benefits or guarantees. You can do this either through a financial adviser or by checking with your pension provider.

Take advantage of household savings on offer 

If you’re living alone as the sole occupant of a property you can get a 25% discount off your council tax bill – but you do need to apply for this[iii]. And, when it comes to your gas and electricity, make sure you do some research to find the best deal (e.g. one that rewards low usage or without any standing charges). 

Know your outgoings

Make a note of all your financial commitments that you need to keep paying no matter what – e.g. your rent, mortgage or council tax – and know the total of these commitments. Then take a long, hard look at your monthly spending over and above that. If you don’t already, pull together a budget spreadsheet and make yourself record everything that you spend money on for a couple of months – there’s plenty of online tools or apps to choose from, or Excel works too. You’ll soon start to identify any money black holes, whether it’s your daily coffee, takeaways, or trips to the pub, where you might be able to cut back and save for your future – we’re not suggesting being “boring”, just a little savvier.

For more advice, visit Standard Life

[i]  ONS: Marital status by age group and sex, England and Wales, 2002 to 2016
[ii] Marriage and divorce on the rise at 65 and over
[iii] Who has to pay council tax

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Last modified: June 12, 2021

Written by 3:23 pm Money Saving Tips