Managing your money as a single person has both advantages and unique challenges. As a single person, you have complete freedom over how you budget and save. While you won’t have the safety net of a second income, you get to decide how you spend your money and when. Here are a few tips to help you build single savings habits.
Create a Budget
One popular method of budgeting is the 50/30/20 method. With this strategy, you allocate 50% of your income for fixed costs, 20% for savings and debt repayment, and the remaining 30% for your wants. While you may need to adjust these percentages to fit your individual situation, they’re a useful guide for budgeting your money from month to month.
Live More Affordably with Roommates
One financial benefit of being married is that you can share living expenses or purchase a home together. Rent is a significant portion of most people’s monthly expenses, so splitting rent can make a big difference. You can split the cost of utilities, internet bills, and generally pay less per square foot of space. Ultimately, you need to choose a living arrangement that makes you happy and doesn’t break your budget.
Create an Automatic Savings Plan
You'll want to build a savings account that could cover three to six months’ worth of living expenses. Follow a ‘pay yourself first’ method where every month, a few days after payday, money gets automatically transferred from your primary account to your savings. Having it automated ensures that it happens without fail every single month.
If you need to make sure you have access to your money but still want to earn as much interest as possible, consider opening a Money Market Account. If you don’t need to access all of your savings right away, consider putting some money away in a high earning CD account.
Make Your Kitchen Your Favorite Restaurant
It can be tempting to eat out every night, but that puts a big dent in your budget. To combat the restaurant habit, designate one or two days a week for eating out. The rest of the week, cook for yourself.
Focus on Paying off Debt
One of the best times to go all-in on paying off debt is when you’re single. With fewer responsibilities and dependents, you can put more of your income toward accelerating the process of becoming debt-free. There are different methods to pay off debt:
- Avalanche method: paying off your high-interest debt first to eliminate your most painful debt before avalanching your payments to less critical debt.
- Snowball method: paying off your smallest debt first to eliminate debt faster and remain optimistic.
The bottom line is that you should use your time single to focus on your own well-being, which includes improving your finances.
Prioritize Your Retirement
Successful retirement planning is a lifelong process, and the earlier you begin saving, the better. If your company is offering to match a percentage of your 401(k) contributions, it’s a good idea to take advantage of it! Also consider putting money into an Individual Retirement Account (IRA) to maximize your retirement savings.
You’re the one in charge of your future, and it’s essential you build beneficial financial habits now to set yourself up for the future you want. Whether you are trying to jump-start retirement planning, save for a home, or pay off student loans, focusing on your end goal can help you deal with the day-to-day inconveniences of saving.