Financial planning for single women: what you must consider

1 min readLast updated April 30, 2024by Lisa-Marie Voneshen

This article will take you through the importance of financial planning for single women and what you should consider when building your financial plan.

Summary 

  • Single women tend to have less disposable income than couples and may struggle financially with unexpected events. 

  • Financial planning is important regardless of marital status, but single women can benefit substantially from being prepared. 

  • From budgeting to insurance, there are many ways that single women can be financially prepared, whether it’s for unexpected costs, retirements or reducing a hefty tax bill. 

  • Unbiased can connect you with a financial advisor who can help you reach your goals.  

Why is financial planning for single women important? 

Financial planning is important because it helps you understand your current financial situation, establish future goals, and determine the best ways to achieve them. 

While financial planning is vital for anyone, regardless of where they are in their lives, it’s particularly vital for single women for many reasons, such as the gender pay gap and the “singles premium” or “singles tax.” 

Single people are more likely to spend more of their disposable income than couples, whether on food, utility bills, rent, or a mortgage, as they cannot share costs with another person. 

They also won’t benefit from another person living with them who can help if the unexpected happens, such as losing their job or getting ill. 

When looking at housing specifically, a study by real estate marketplace Zillow found that the “singles tax” for living alone can add up to thousands of dollars each year, with the national average coming in at $7,110. For more populated places such as New York City and San Francisco, this rises to $20,100 and $13,438, respectively. 

So, how can you financially prepare yourself if you’re a single woman? 

We reveal some handy financial planning tips, although it’s also worth considering getting support from a qualified advisor to ensure you meet your long-term goals.  

How can I plan my finances as a single woman? 

It can be intimidating tackling your finances and preparing for your future goals, but being proactive and planning is key. 

Here are some of the major tips to consider when building your financial plan.  

Understand your monthly spending and have a budget 

One of the easiest ways to start getting to grips with your finances is to look at your monthly outgoings to understand how much you spend on rent, bills and disposable spending. 

This can be a great way to identify areas where you can save money or maximize your savings and help you create a realistic budget.  

Build a large emergency fund 

An emergency fund can help tackle unexpected costs, such as losing your job, paying for urgent repairs, or dealing with surprise costs. 

It’s usually recommended that you save at least three months’ worth of your average spending, but ideally, set aside for six months if you can. 

However, if you’re a single woman, you should consider saving more – between six and 12 months. 

As you’re living alone, your costs are higher, and you may not be able to benefit from any immediate support.  

Consider getting insurance 

While insurance offers peace of mind for everyone, single women can benefit significantly.  

For example, life insurance pays out to your chosen beneficiaries or dependents if you pass away and can cover various things such as your mortgage or funeral costs. 

Income protection insurance can be handy as it offers a regular income if you cannot work due to disability or sickness. Critical illness insurance provides a lump sum if you are diagnosed with a certain illness. 

Start saving for retirement as soon as possible  

According to the Census Bureau, the average income for a single woman over 65 is about $40,800. While for a married couple over the age of 65, the average income is over double that at $104,200.  

It’s a good idea for everyone to start saving for retirement early, especially for single women, as you’ll need to save more to afford the same standard of living as your married counterparts. 

Starting to save as early as possible means your retirement fund can benefit from tax relief and compound interest, where you earn interest on interest, as well as employer contributions if you have a 401(k) or equivalent.  

Clear your debt 

If you have any debt, particularly high-interest debt, you should focus on clearing this so you can put the money to good use, such as building your savings or investing. 

Have a credit card? It’s always a good idea to pay off at least the minimum amount every month, as interest can easily rack up.  

Consider investing 

According to a survey by NerdWallet, 48% of women currently have money sitting in investments within the stock market, compared to 66% of men. 

Yet women may be better investors.  

According to Barber and Odean’s “Boys Will Be Boys” study, as detailed in Forbes, Men in general, they reported, earned almost 1% less than women per year in their stock-picking endeavors, while single men underperformed their single women friends by 1.44% per annum. 

More recent studies by Fidelity also showed that women outperformed men when it came to investing.  

Investing is something everyone should consider as you can benefit from potentially higher long-term returns and compound interest compared to leaving your money in an easy-access savings account.  

Get a will and plan your estate  

Planning your estate and having a will benefits anyone, whether single or married. 

With a will, you can ensure that your assets are left to your chosen beneficiaries, which is especially useful if you’re not married or have complex circumstances.  

Estate planning can also be helpful as you can use it to legally reduce the tax burden on your loved ones when you pass away.  

A financial advisor can help you plan your estate so you have peace of mind.  

Consider multiple sources of income 

Having many sources of income can boost your existing income, which could be used for your future, whether it’s your retirement fund, savings or investments.  

There are many ways to make money outside your main job, including renting out a spare room, selling stuff online, monetizing a site, buying a property to let out, or investing.  

Use all your tax allowances 

There are many ways to save on tax, thanks to tax allowances, exemptions, and reliefs.  

For example, if you qualify, you can contribute to your IRA, and it can start earning tax-deferred, or if you have a Roth IRA, tax-free returns. Here, not only are you reducing your taxable income (traditional IRA), but you are also saving for the future, allowing your money to compound and grow over time.  

If you want to get the most out of your money, a financial advisor can ensure you’re using all available tax allowances and help you meet your financial goals.  

Consider financial advice 

If you have financial goals, whether you’re planning your retirement, buying your own home, or considering estate planning, a financial advisor can help. 

Let Unbiased match you with an SEC-regulated financial advisor. Simply fill out our quick questionnaire, and we will match you with a financial advisor who is suited to meet your needs.  

Get started now.   

Senior Content Writer

Lisa-Marie Voneshen

Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.