The importance of financial planning for single peoplePosted on: 08 August 2013 by Lynne Williams
Lynne Williams points out the key factors to consider when planning your future as a single person, whether you have chosen to be single or not.
Financial planning for single people as with any other financial planning will vary in its complexity and quite often that depends on your individual circumstances, including whether you have chosen to be single or not.
There may be fewer factors to consider when planning your future as a single person which can allow you more flexibility with fewer complications. But if becoming single has happened to you unexpectedly, things can get complicated.
As advisers, part of our work involves advising people who have become single unexpectedly. If you've ever experienced that, you will know what a difficult time that can be. The sense of loss after the death of your husband, wife or partner can be overwhelming and thinking about anything else, including financial arrangements can seem a huge task.
If your partner previously dealt with all the household finances, it can mean that you have a steep learning curve ahead of you, particularly if you have a variety of financial commitments, such as mortgage payments, investments, and a pension and so on. But it's worth keeping in mind if you're in this situation that you're not on your own. All good financial advisers will be there to support you with organising your finances and making sure you are secure.
You might have become single following a divorce. Again, it can be an overwhelming time with many things to sort out, both emotionally as well as financially. But it can also be an opportunity for you to reorganise and reassess your finances. Your independent financial adviser is exactly the right person to help you to restructure your finances to either increase your income, make retirement provision, or make some investments.
However you have arrived at being single, whether through choice or circumstances, being solely responsible for your finances can be really rewarding. When there is only you to consider, it can make your financial choices more straightforward. Being financially single brings with it a great deal of independence.
As you only have yourself to depend on, it's worth considering your finances more carefully. If you haven't done so already, think about planning ahead for unexpected events, such as losing your job or being too ill to work. There's nothing like having the peace of mind of knowing that you're covered for possibilities, however unlikely. For anyone, single or not, planning for your financial future is essential.
Budgeting is one of the key factors in any financial plan and is the first step towards financial success and independence. If you already have your budgeting in place, great, you’re right on track; if you haven’t, why not make that the first step of your financial plan? Any good independent financial adviser will be happy to help you take that first step.
What else can you consider as part of your individual financial plan? You may not have thought about it before, but health insurance could also be an option. Although we don’t like to think about it, the reality is that anyone can become ill or have an accident, regardless of their age or current health condition. If you are the only source of income for your household and you miss work or lose your job due to an illness or accident, you run the risk of accumulating a lot of debt. Forward planning and preparation, however, can avoid this.
What about planning for further ahead as well? However far you are from retirement, it’s never too soon to start a pension fund. The earlier you can start building up a pension pot, the better chance you have of accumulating a big enough pension pot for a truly carefree retirement. As an individual there are various ways of building up your capital – from Individual Savings Accounts (Isa’s) to an individual investment portfolio.
The value of shares and investments can go down as well as up.
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made. All information is based on our understanding of current tax practices, which are subject to change. Your home may be repossessed if you do not keep up repayments on your mortgage.
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