There is no better time to implement a financial plan than right now, because your life will more than likely become infinitely more complicated later on. Learning to handle your money, and having a financial plan in place, will make your life easier. Following are a few finance tips for singles.
Create a Budget
Even though you may not have any clear cut financial goals, it’s important to know where your money is going--what it’s being spent on. In order to do that, you need to create a budget. Sit down and make a list of all your income on one side a piece of paper, and your expenses on the other side. If your outgo exceeds your income, you need to make some changes immediately. Keep track of every penny you spend, and compare the final tally to your income. Determine where you can make some changes in your spending habits.
Don’t Spend More than You Make
Once you’ve created a budget, you’ll have to find a way to live within it. That means you will have to make sure you don’t spend more than you make. Pay attention to everything you intend to buy, and before you hand over the money, determine whether or not it’s a necessity. If it’s not, then you may want to think about not making the purchase.
Control Impulse Buying
A lot of purchases are made simply because something catches your eye, and not because it’s a necessity. In order to plan for your future, you’ll need to control impulse buying. It’s not always easy to do, especially for a single person, because you generally don’t have anyone to worry about except yourself. However, if you train yourself to control impulse purchasing, you will have more money for retirement.
Open a Savings Account
You may think it’s ridiculous to think about retirement when you’re just starting out in the workforce, but actually there is no better time to do it. The sooner you start saving money, the more you’re going to have when it comes time to stop working. A simple savings account is a good way to start. Open a savings account and try and put a little bit of money in it every week. Organize your budget so you’ll have some money available to put into your savings account regularly. You’ll be surprised how fast your savings will grow--providing you deposit money on a regular basis, and refrain from using it for anything other than emergency purposes.
Contribute to Your Retirement Plan
The best way to save money for your retirement is to not actually touch the money that goes into your retirement plan. A good way to do this is to put your money into something like a 401k at the place you work. The money will automatically be taken out of your paycheck and put into the retirement account. In most cases, your employer will be matching all or part of the funds that go into the account, so it will grow exponentially. By having the money taken directly from your check, you’ll be living on the remainder, because that’ll be the budget you’ve worked out. You won’t even miss the money that’s going into your retirement plan, and it’ll be there when you’re ready to retire.
Implement a Personal Retirement Plan
If you work for yourself, or for an employer who doesn’t offer a retirement plan, you’ll have to implement your own. Instead of the money coming out of your check automatically, you’ll have to take care of your retirement plan yourself. That calls for willpower on your part. Every time you get a check, before you pay your bills, deposit some of the money into a retirement plan, commonly referred to as an IRA, or Individual Retirement Account. In order to do so efficiently, you should create a budget that doesn’t even include the money for your IRA. In this way it will work exactly like a 401k, only you’ll be handling the deposit yourself.
Have an Emergency Fund
Having an emergency fund is extremely important. As a single person, there is no one to watch over you, so if something happens, such as your car breaking down or your laptop freezing up, you won’t be able to pay for the repairs unless you’ve had the foresight to start an emergency fund. This is something you should do as soon as you get your first paycheck.
Guest post from Frances Hall for accredited online colleges.