Everyone should be familiar with budgeting, but it’s especially crucial for single people.
As a single person, you may have to take care of all your finances and expenses on your own. Because of this, you may have difficulty making ends meet. In addition, a single income means a lower level of accountability.
What’s more, in the U.S., nearly 118 million people are single, or about 46%, according to the U.S. Census Bureau. As of 2021, a record-breaking 52% of women are either unmarried or separated, according to Wells Fargo Economics.
Why is that so concerning? Financial advisors who work with single women say they are particularly concerned about recession and inflation.
“In times of inflation, the cost of everything goes up, including rent, utility bills, groceries, and health care,” said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning. Curtis noted that when women live alone, “they take on the brunt of increased expenses.”
It’s only made worse by the existence of the gender wage gap, with women still earning 82% of what men do, Curtis said. “Rising inflation hits women harder with their smaller incomes,” she said.
You can, however, plan and create a budget that works for you and helps you achieve your financial goals with a little effort.
Why is Budgeting Important for Single Women?
For single women, budgeting is especially important for several reasons.
Women, according to the Center for American Progress, are more likely to face poverty even in better economic times than men, and unmarried women experience poverty at a higher rate than married women. According to the Census Bureau, there were 13.4 percentage points more poverty rates among unmarried women in 2000 than among married women, but 14.6 percentage points more in 2008.
For women of color, poverty risks are even greater, especially if they are unmarried. Compared with 18.5 percent of unmarried white women, 30 percent of unmarried black women, and 29.5 percent of unmarried Hispanic women were poor in 2008.
Secondly, single women tend to be burdened by debt. The Education Data Initiative, for example, found that women make 26 percent less than their male counterparts but have higher student debt balances and higher student loan payments. Even though women make larger monthly payments, they usually take two years longer to pay off their loans.
Furthermore, because single female borrowers earn less than single male borrowers, their mortgage debt is, on average, 3.3 times their income versus 3.2 times for single males.
Thirdly, a study published in the American Economic Journal in 2021 theorizes that married people earn more money because of two factors:
- Income pooling, or having two incomes in a household. By relying on their partners’ income while searching for the highest-paying job, individuals can be more selective with their job selection.
- People who are married tend to advance their careers faster than those who are single.
How to Create a Budget
First things first, consider a budget. It’s essential, however, to find a budgeting style that works for you and follow it consistently.
The best way to get started is to track your spending. By doing this, you will be able to see where your money is going on a monthly basis. If you want to keep track of your spending, you can do it manually or use a free budgeting tool.
When you understand your spending habits, you can create a budget. There are several ways to budget. However, one of the most popular methods is the 50/30/20 rule.
In this rule, 50% of your income goes toward essential expenses like rent, food, and transportation. 30% of your income goes toward discretionary expenditures such as entertainment and dining out. And approximately 20% of your income is set aside for savings and financial goals.
The envelope system is another popular budgeting method. This method involves dividing your cash into envelopes for different categories of expenses. After you run out of cash in an envelope, you cannot spend any more money in that category until the following month.
Budgeting methods should be chosen based on individual preferences and financial circumstances. Find the method that works best for you by experimenting with different approaches.
Tips for Budgeting as a Single Woman
Women who are single should take note of these tips when budgeting:
Set financial goals.
What are you hoping to achieve with your money? Would you like to save for a down payment on a house? Is it your goal to retire early?
A clear understanding of your financial goals will help you create a budget to help you achieve them.
Automate your finances.
The best way to stay on budget is to automate your finances. In other words, you can set up automatic transfers between your checking account and your savings account. By doing this, you can save money without even thinking about it.
Live below your means.
The key to a healthy budget is living within your means. In other words, you should spend less than you earn. A good way to save money and reach your financial goals is to live below your means.
Despite this, living below your means doesn’t mean depriving yourself. The goal is to be aware of your spending habits and make informed financial decisions.
To help you live below your means, here are some additional tips:
- Shop around for the best deals. Take your time to choose the right item before buying it. Before making a purchase, compare prices at different retailers.
- Use coupons and promo codes. You can find coupons and promo codes for your favorite stores and brands in a variety of ways. Whether it’s online, in newspapers or magazines, or even in your mailbox, you can find them everywhere.
- Buy used items. Often, you can find good-conditioned used items for a fraction of the cost of new ones. Online marketplaces, thrift stores, and garage sales are all great places to find bargains.
- Do things yourself. Instead of paying someone else to do something for you, see if it’s something you can do yourself. This could include things like mowing your own lawn, cooking your own meals, repurposing furniture, or learning some basic home repairs.
- Find free or low-cost activities. Several free or low-cost activities can be enjoyed in your community, such as going to the library, visiting the park, or participating in free events.
Cut back on unnecessary expenses.
See if you can reduce unnecessary expenses in your budget. There may be ways to save money, such as eating out less and canceling subscriptions you no longer need. A little bit goes a long way.
There are even online tools that can help you with them. Trim, for instance, is an online service that helps consumers manage their finances better. In addition to helping you eliminate unwanted expenses and automate your savings, it can also help you figure out how to manage your debt and figure out how to eliminate debt.
Besides analyzing your spending for additional savings, Trim can also negotiate your cable or internet bill on your behalf.
Find ways to make more money.
Finding a side hustle, if you have the time, can help you make ends meet if you are struggling financially. From driving for ride-sharing services to starting your own business online, there are plenty of opportunities to get started. Earning extra money to contribute to your budget is possible by working a side hustle.
You can, however, earn more money at your full-time job by:
- Negotiating your salary. One of the best ways to earn more is to do this. If you’re not offered a fair salary, do your research and be prepared to walk away.
- Asking for promotions. Don’t be afraid to ask for a promotion if you qualify.
- Networking. Meeting new people and learning about new opportunities is possible through networking. Make connections on LinkedIn, attend industry events, and reach out to people you admire. The Women’s Network is a great place to start.
- Investing in yourself. A higher salary will result from investing in your education and skills. Attend workshops, take classes, and become certified.
Find someone who will hold you accountable.
A good accountability partner can make all the difference if you’re struggling with your finances.
The best accountability partner is someone who encourages you each step of the way. But also give you a reality check and call you out as needed.
You shouldn’t feel ashamed to ask someone to help you achieve your goals.
Review your budget regularly.
Your budget needs to be reviewed regularly and adjusted as necessary as a living document. For instance, an increase in your salary at work can increase your savings rate. Adjusting your budget is possible if you experience unexpected expenses, such as a car repair.
Budgeting as a single woman can be challenging, but it is possible. The tips above can help you create a budget that works for you and achieves your financial goals.
For single women on a budget, here are some additional tips:
- Avoid impulse purchases. You can easily overspend when you’re shopping on impulse. You should ask yourself if you need the item and can afford it before purchasing.
- Improve your credit score. Making minimum payments on all of your accounts each month is one of the quickest ways to raise your score. It would also be ideal if you could pay off your outstanding credit card balances before the due date.
- Shop around for insurance. There can be a significant difference in insurance rates between companies. It is a good idea to compare quotes from several insurance companies before renewing your policy. You can also save time and money by bundling auto, home, renter, or condo insurance.
- Invest for your future. The earlier you invest, the longer your money has to grow. Investing options are numerous, so you should do your research and choose investments that are right for you. To learn more, I recommend reading one of our previous articles, “Invest Like a Woman: How Women in the U.S. Can Take Advantage of the Stock Market.”
- Take advantage of tax breaks. Single women can benefit from various tax breaks, including the Earned Income Tax Credit (EITC) and the Child Care and Dependent Care Tax Credit (CDCTC). If you are eligible, take advantage of these tax breaks.
- Get help if you need it. Many resources are available to help you if you struggle to make ends meet. Both options are taking a financial literacy class or talking to a financial advisor. You may also want to consider organizations like the Women’s Resource Center (WRC) or Life of a Single Mother.
What is a budget?
An individual’s budget outlines how they will spend their money. You can use it to keep track of your income and expenses to make sure you don’t spend more than you have
Why is it essential for single women to budget?
Often, single women are responsible for financially supporting themselves, so they must budget carefully. Saving money, reaching your financial goals, and avoiding debt can all be achieved through budgeting.
How much money should I be saving each month?
Your circumstances will determine how much money you should save each month, so there is no one-size-fits-all answer to this question. The general rule of thumb is to save at least 10% of your monthly income. The more you can save, the better.
How can I create a budget that works for me?
Budgeting can be simplified by dividing income into three categories: essential expenses, discretionary expenses, and savings. A few examples of essential expenses are rent, food, and transportation. Things like dining out, entertainment, and shopping are considered discretionary expenses. Your savings are for future goals, such as retirement or a down payment on a house.
You can begin allocating your money once you have divided your income into these three categories. When setting your budget goals, it’s important to be realistic. Saving a small amount every month is a good start, and as you get more comfortable with budgeting, you can increase it.
What are some common budgeting mistakes to avoid?
Here are a few budgeting mistakes to avoid
- You don’t track your spending.
- Budgeting with unrealistic expectations.
- Having a rigid budget.
- Leaving out some expenses from your budget.
- Spending more than you have available for discretionary expenses.
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