Smart money moves are critical for a single young woman to make upon starting a career path. It’s critical to be smart about your money as soon as you start earning it. You alone are now responsible for your personal finances, and your financial success!
Keep in mind that women (on average) live longer than men. So you will need more money for yourself in the long run if you survive your husband/partner. That said, if you end up partnering with someone later in life, you’ll have that much more money for your future due to the combination of your good habits.
But, if you stay single, you’ll also be okay, if you’ve been saving on your own all along!
Smarter money moves for young single women in a new career:
You can also listen and watch my presentation on this topic on the Envision Wealth Planning YouTube channel.
1. Smart money move: Establish a firm financial foundation to set up and keep good financial habits. It’s so much harder to correct later on if you don’t get off on the right foot. So in the beginning, you want to live on less than what you make, even if you’re making very little right now!
Plenty of smart women before you spent some lean years on beans and rice, and they all say it was worth the sacrifice. These women will tell you to maintain a habit of creating and sticking to a budget now. Pick a style and use it!
Whether you use envelopes filled with cash, earmarked for food, an Excel spreadsheet, or an app like Mint. The point is to start on the right foot by tracking what you save and spend to stay within your budget. So you don’t overspend or forget to pay something.
Even better is to take it a step further and put things on autopilot as much as possible, and set up automatic transfers for as many of your regular bills as possible.
Pick a set dollar amount or percentage of your paycheck to be automatically transferred to your savings. Every time you get paid, that out-of-sight, out-of-mind approach will grow your savings quickly. It will save you from the “decision fatigue” of having to “do the right thing” every month. When it comes time to put something away for a rainy day, which brings us to tip two, start saving now.
2. Smart money move: Take advantage of the time you have, as well as the power of compound interest. Start investing or contributing to your employer-sponsored retirement savings accounts. Your goal should be to max out your contributions, if possible. Again, your older future self will thank you!
3. Smart money move: Protect yourself! That means first and foremost, establishing an emergency fund. Typically, people are told to keep a three to six-month cash reserve as a single woman. You definitely want to be conservative here and aim for six months. Many people do not have parents or another family to fall back on in an emergency. And if you want to be independent, you have to act independently when it comes to your money!
Also consider disability insurance to protect yourself as a single woman. Two of your biggest financial risks are unemployment and being unable to work because of a disability, like an extended illness or an accident. While health insurance pays for most of your healthcare bills, it won’t replace your income that pays for your living expenses if you’re out of commission. You should also set up formal a power of attorney just in case you become incapacitated. Since you’re no longer a minor, it would be smart to decide (now) who you want to take care of your finances and make healthcare decisions for you.
4. Smart money move: If you become disabled, leverage your employee benefits. Don’t leave money on the table. Your benefits package is part of your total compensation. So don’t ignore pieces of it. Take the time to learn exactly what is in your benefits package. Take advantage of all the things that make sense for you most, especially if there are services offered for free. This is where some people may find they are offered that important disability insurance protection I mentioned above, and at a lower or at no cost to them. Some people may also have low-cost legal services plans within their benefits package. You can then use this service to set up your power of attorney.
Health insurance is one of the most common employee benefits. Some plans also offer health savings account options, which you should take advantage of if that’s available to you. And of course the big one, a retirement plan. If your employer offers a 401k, 403B, or one of the many types of other retirement plans, pay attention to any matching contributions. This means the company’s money will match contributions you make to your own plan. It’s free money! And again, part of your overall compensation package. So don’t walk away from it unless you have a good reason to do so.
5. Smart money move: Get out of debt! Getting out of debt is the true path that financial freedom. Because being debt-free means you aren’t throwing money away on high-interest credit card payments. Good for you if you finally have your car and student loans paid off! You don’t want that debt hanging over you for 10 or 20 years or more. You’re financially free when you don’t owe anything other than your basic living expenses. And for many smart women, student loan debts can feel like a burden.
In fact, it can take such an emotional and financial toll that paying off student loan debt would be one of the few reasons why you might consider putting that goal in front of savings. Even before saving. But people like the idea of growing assets more than they enjoy paying off debt. However, your debt will continue to grow if you’re not paying it down at a rate that’s going faster than your ability to save.
If you have student loan debt, do you have a co-signer? If so, if you die, do you have life insurance? You do not want your co-signer stuck with the whole debt if something happens to you. If you have federal loans, that protection is actually baked into the cake. Likely it’s not if you have private loans.
So those are my top five tips for the young single woman who is just starting a career path. I’m always happy to help put together a personalized financial plan to work through these and other issues involved in your specific situation. You’re welcome to schedule a no-obligation Discovery call with me at (505) 308-7427 or kc@envisionwealth.us.
