A Financial Plan

There is no other opinion that you have to consider in deciding where you put your money or how you spend it.  Yes, this is an incredible freedom.  But with great freedom comes great responsibility.  And the Single Woman is responsible for the care and control of something priceless – her Self.

It is the vehicle that she received in the womb, the character that she has shaped and nurtured, the soul that will sweeten as she grows into her old age.  Her Self.  And this Self has needs.  Emotional, physical, mental, spiritual, and financial needs.

As you search your life for opportunities to serve (#4), take a visit to your local retirement home.  You will see the stark realities that face old ladies who have not prepared for their financial needs of the future.  There are unprepared widows, mothers abandoned by their children, the divorced and destitute on the one hand, and there are those who have prepared as best as they could for a self-reliant and comfortable golden age.  The unprepared find themselves 100% dependent on others – family members who take an interest, charity groups, government institutions.  They have very little say and very few choices in how they live their day-to-day life because they do not out of their own resources pay the bills.  Their present is very bleak and their future is hard to see.

Single Woman, this could be you.  The lesson?  Do not be frivolous with your money in your youth.  We have always been told to not spend wastefully and to save what we can, but that is the most basic of financial plans.  And we, by virtue of living in singleness and having no one to depend on but ourselves to do this planning for us, should be thinking a little beyond the basic.

While we are part of the earning population we should be taking confident steps toward a bright financial future every day.

Step 1. Research.  Read a book.  Look in the financial section of the book store.  Start simple – even the silliest get-rich-or-die-trying fad books have something to teach you.  Look for practical books and research the authors – is this a person whose advice I can trust?  A recommendation from the Singlestream is Rich Woman of the Rich Dad Poor Dad series.  Rich Dad Poor Dad is also an enlightening read.  Books by Jim Cramer of Mad Money are also never a waste of time.  Cramer’s shows are also useful as are his constant twitter updates.  Get to know what’s out there.

Step 2.  Seek support.  An accountant girlfriend can give you some interesting insight and engage you in debate as to what is best for you.  Girlfriends are free and they enrich your lives in one way while you enrich their lives in others.  And if your girlfriends are real friends they will be happy to help.  If you aren’t in the social circle of an accountant, call up your bank and arrange a meeting to seek advice.  Or hire an accountant.

Step 3. Budget.  Put Microsoft Excel to good use.  And leave nothing out.  Put everything into a spreadsheet from your salon visits to your dry cleaning.  Use the functions.  Make the sheet add it up and keep track for you.  Check your sheet once a month without fail.  An example of a Single Woman’s budget is soon to make its appearance on the Singlestream so keep a look out for that.

Step 4. Spend carefully and Save.  We all know where we can cut back – take lunch to work, make our own coffee, not need to add a 100th shoe to the closet.  But once you have budgeted and budgeted your savings and obligations in first, your spending should be limited to what is left.  As to your savings – cut a portion of your salary out.  10% is a nice round number.  Send it straight to an account with high interest that you will forget about.  Let it add up and add up.  Set up an automatic transfer so that you never actually see that money.  Don’t give yourself an escape route from your savings plan.  It is from this fund that the deposit for your home will come, your investment ideas will be funded, and your grocery money will come out of here when you’re 85.   Don’t save so much that you always feel the need to dip into the fund.  Also, contribute over the limit on your pension fund.  You do have a pension don’t you?  Discipline yourself to save.

Step 5. Get debt free.  Quickly.  Sure, you have a student loan, you have a car loan, you have a mortgage.  All the things you have to do to do you.  But keep a responsible head on.  Debts are a scary thing!  For example, if you purchase a house with a mortgage for $200,000, by the end of the 30 year term you are very likely to have paid out that amount twice – repaying the principal and interest.  Don’t just make your monthly mortgage payment – it is the minimum and it must be met.  But make the effort to pay it off quickly.  Save yourself some of that interest money for your old age.  Credit card debt is the worst – that interest is incredibly high compared to most other debts and that card is so very easy just to swipe when you need something.  Practice self-discipline.  Or leave the card home.  It’s not your money after all – you’re borrowing from a loan shark every time you swipe.

Step 6. Insure against catastrophe.  Health Insurance has been a very hot topic in recent years.  And it is one very close to my heart.  If you think about it, an accident victim in the United States can run up bills in excess of US$500,000 in six months.  Even if you have been saving all your life there’s a strong chance you won’t have that kind of money hanging around in your bank account when you need it.  Medical bills have been found to be one of the greatest causes behind bankruptcy filings.  Insure against it.  Life Insurance is also an important product.  Sure, your family will need it in order to settle your affairs upon your death and if you’re a Single Woman this may or may not matter to you.  But what will be important to you is that you will at some point in your life want a mortgage.  In order to get your mortgage you will need to have life insurance at least for the amount that you have borrowed in the mortgage.  Neither of these insurances are to be taken for granted.

One thing you probably won’t know is that the older you get the harder it is to get health insurance or life insurance.  When you apply to be joined to one of these insurance plans your lifestyle and the state of your health is assessed to determine whether you are a risk that the insurance company can take on.  This process is called underwriting.  Depending on what your health looks like when you apply, you may be given exclusions on your coverage, limitations on your cover, or only qualify for a basic level of cover.  This is why it is important to do these things when you are young and immortal.  Not only will you be able to qualify for a million dollar life insurance policy, but you will be healthy enough to have no exclusions so that later in life when you do develop an illness you aren’t left in the lurch.

These are the basics my Single Ladies.  But if you take nothing else from this, please take this one thing.  Do your research.  Protect your financial future.  And start today.

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