While more and more people are choosing the single life to the traditional family structure, many members of this growing segment of society aren’t paying enough attention to their personal finances.
Living life on your own terms has its appeal: The freedom to socialize with others when you choose, travel when you want, being accountable only to yourself. Having control over everything from travel plans to blankets to the remote control. But it also means having to rely on your own resources to build your nest egg or should something go wrong.
In fact, more people live alone now than ever before. In 2006, Statistics Canada reported that no less 27% of households (yes, that’s more than one out of four) were people who lived alone. It is a largely urban phenomenon, with prosperous economies enabling more people to make the choice to go it alone.
Source: Statistics Canada. Family Portrait: Continuity and Change in Canadian Families and Households in 2006. 2006 Census. (Cat. No. 97-553-XWE2006001). Ottawa, 2007.
But single life also has its challenges: While the median income of Canadian families is around $67,500, median incomes for lone parent families are a mere $30,000. Add to that none of the economies of scale that go with sharing heat, housing and utility costs, and things can get tough. Thoughts of the future may be put aside while dealing with the realities of the day. Another survey of singles by a major financial institution showed that 43% expected to retire later because of their lone-wolf lifestyle.
It doesn’t have to be that way. Here is an overview of the things singles should be planning for now.
- Set goals
Good or bad, you won’t always be in the same situation you are now. Where do you want to be in ten years? 20? 30?
- Establish a budget
Depending on your situation, this doesn’t necessarily mean going on a money diet. It is simply a plan to meet your day-to-day financial obligations, along with a savings component;
- Be properly insured
Coverage should include wage loss insurance, extended health coverage and critical illness insurance. Advances in medicine mean more of us survive life-threatening illnesses, but living can become more complicated and expensive;
- Start a retirement plan
The sooner you start saving, the less you will have to save overall. That plan should also take into account your unique needs as a person seeking to be self-reliant for the rest of your natural life. With fewer obligations to others, you may have more freedom to take bigger risks when investing;
- Plan for your own demise
Make a will and establish who has power of attorney should you become unable to make your own choices.
(Source: Desjardins Financial Security Independent Network)