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Going it Alone | A Financial Guide for SinglesSingle individuals without children make up one of the fastest-growing segments of society today. In fact, the U.S. Census Bureau reports that for the first time in the nation’s history, there are now more people living alone in single-person households than there are traditional families of a husband, wife and one child.

According to the latest U.S. census, as of the year 2000 there were approximately 27.2 million single-person households versus about 16.6 million three-person family households. And the percentage of single-person U.S. households — now at 26 percent — has been steadily increasing for at least three decades.

These childless singles include people of all ages and from all parts of the economic and social spectrum. They’re young people settling into their first apartments, middle-aged divorcees and people of retirement age and their incomes and assets can vary from nearly none to millions.

This growing population has unique financial concerns. Most significantly, singles often have only one source of support and there’s no spouse or partner to fall back on should that income disappear so planning is vital.

Here are issues singles should consider when making a financial plan.

Get the picture! You must have an accurate picture of your existing finances before you can make a plan and set goals. For at least a month, carry a small notebook and write down every penny you spend. You probably will be surprised at how many purchases are non-essentials money you could be saving or investing.

Review your banking and investment accounts, monthly bills and insurance policies. If you have questions, ask your banker, financial adviser, broker or insurance agent to help you get a better understanding of your situation.

Set goals. Do you want to buy a home or a new vehicle? Take great vacations? Save for retirement or your wedding? (After all, you may not be single forever.) Whatever your goal, estimate what you’ll need to save to attain it. And set a specific date - you’ll never reach “someday.” Instead, establish a timetable and stick with it.

Set aside a cash cushion. You may need a cash reserve or assets you can easily liquidate in case you lose your source of income. While estimates vary for how much you should have available, six months’ income is a good rule of thumb. Your financial adviser can help you set up a fund that’s best for your needs.

Commit to insurance - Illness, accidents and disability are serious challenges for anyone - even more so for a single-income individual - so it’s essential to have health and disability insurance. If your employer provides health insurance, read the policy carefully and if you have questions, ask the human resources department for answers.

If necessary, pay extra for a disability supplement, and find out how your health insurance coverage would be affected if you had to stop working. You also should consider long-term care insurance.

If you’re a renter, take a look around your home and add up what it would cost to replace your possessions - now you see why renter’s insurance is a good idea.

Set up automatic savings. In general, single people without children have greater than average discretionary income (you may decide to pass on a new pair of sneakers for yourself, for example, but when your child’s feet grow, there’s no choice but to buy new shoes). Now may be a great time to put those discretionary funds into investments. To get on the right track, pay yourself first. Set up an automatic deduction that goes right from your paycheck into an investment or savings account. What you don’t see, you don’t miss.

Pay as you go. Prevention is the best strategy for credit card debt, and here are two tips to help you keep credit spending under control.

● When you make a credit card purchase, write a check for the full amount, payable to your credit card carrier, and put it with your monthly bills. When the credit card bill arrives, send the accumulated checks, or total them and pay the amount using online banking. You have the convenience of a charge card, yet won’t pile up big debts.

● If you occasionally buy on impulse, give yourself time to consider whether the purchase really is a “must.”

Eliminate credit card debt. If you own a home, consider a home equity loan to pay off the cards – this type of financing typically has lower interest rates than many other forms of unsecured credit. Or pay the minimum on the lowest-interest cards and pay off the highest-interest debt as soon as possible. Then pay off the next highest, and the next.

Another option is to consolidate debt by transferring your higher interest credit card balances to a credit card with lower annual percentage rate (APR). Consolidating your bills to a lower APR could help you pay down your credit balances faster. And with most debt on one card, you will have fewer payments to make each month.

Become a homeowner. According to the National Association of REALTORS® 2009 Profile of Home Buyers and Sellers, 21 percent of recent home buyers were single women and 10 percent were single men. With today’s low-interest loans, homeownership may be within your reach. You could enjoy the potential tax benefits of ownership while you build equity. Consult your tax advisor regarding tax benefits.

Planning to marry? Talk with your future partner about finances before you say “I do” - divorce attorneys say financial misunderstandings are at the root of many failed marriages. Also talk to your tax advisor about timing major financial decisions if you plan to sell a home.

You may have noticed a recurring theme in this article, which is to get help from professionals - your financial advisor, insurer, banker, broker and other experts. You may be single, but when it comes to planning, you don’t have to go it alone.


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