by Jack Thornton

Created on: October 31, 2007

Being single provides both the greatest opportunities and biggest pitfalls for financial planning. The good news is that you will have only one set of goals to plan for. The bad news is that there is nobody to back you up if something goes wrong.

To emphasize the good, here are several tips to help you reach your goals.
1. Eliminate debt. Eliminating debt will do more good for you than any other action you can take. Paying off credit cards at 12%, 16% or even 20%+ interest rates, then eliminating other debt will let you live better on less money than you live now.

2. Think about buying a home. This does not mean buy a home. Depending on your goals and the real estate market where you live, buying may or may not be the right decision. Compare the costs of home ownership with rents in the area. Will appreciation make up for the extra costs in the time you plan on living there? Short term usually favors renting and long term buying, but check it out for yourself.

3. Invest regularly. No matter how young or old you are, dedicating money for investing now will do more for you than investing later. Check out the many calculators available to see how the miracle of compound interest can help change your life. How you invest is important, but is also an individual decision. It is generally best to do some retirement and non-retirement investing to meet all of your future financial needs, no matter when they occur.

4. Write down your goals and do not be afraid to share them with other people. The simple act of writing down your goals forces you to focus on what you want to do. Sharing them with other people - especially people you care about or whose opinion you value - makes you accountable for reaching those goals.

To offset the bad, there is a need to do contingency planning. What can go wrong, and how can you prepare for it?
1. Health and Disability Insurance. These are the most important contingencies that you can get. Health and disability insurance directly address the biggest dangers of being single - being sick and unable to work. Together, they will help you get better and cover expenses until you can work again.

2. Emergency fund. Put aside money to build an emergency fund. From a few hundred to several thousand dollars, every bit of money in that fund is insurance against the unexpected. The larger the fund, the larger an emergency that can be handled without a problem. For most single people, 3-6 months of after tax income is plenty and a thousand dollars is a good start.

3. Build your social network. If you do not live in a town with family, having friends who are willing to help you out can be a lifesaver. It does not have to be financially either - your insurance and emergency fund should take of that. It is the more basic needs of getting around, moral support, and checking in on each other. Think about it - if your car was destroyed in an accident, even if you were fine, could you still get to work on your own before replacing the car?

Being single is not all good or all bad when it comes to financial planning. What is most important about being single is that you realize that financially, there is nobody else who is going to take care of you. Take steps to accentuate the good things and setup ways to avoid the bad, and you should be able to meet all of your financial goals.

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