The Single Life: Financial Planning for the Single Woman

29 Apr The Single Life: Financial Planning for the Single Woman

It might feel as if everyone is paired off. But if you’re single, you’re part of a fast-growing demographic. In fact, the number of people living alone in Canada has doubled over the last 35 years.[1] A one-person household is now the most common type of household in Canada.[2]

Whether you’re single by choice or by circumstance, it’s critical for a single woman to manage her money wisely. The pressure’s on you alone to provide funding for the life you want to live. And while that does offer a certain amount of freedom, there are also some unique challenges to being single that must be addressed.

Financial Planning

When you’re on your own, it’s important to have cash on hand. Some women keep their money in the bank and let it add up, but smart financial planners suggest you go a step further.

An emergency fund – two or three months of living expenses set aside in case something unexpected happens – might be the only thing protecting you from disaster. In some cases, it may be a good idea to keep this money in a TFSA, where your money can grow without being taxed.

Another important savings component is a retirement plan, and it’s critical to begin this planning as early as possible. Setting aside even a small amount every month can really add up.

Disability Planning

If you become incapacitated, who will make decisions for you? This can be complicated. If you’re young, a parent may be able to take on that role, but you may also want to consider close friends or other family members, such as siblings or a niece or nephew. The person you choose should be designated as your power of attorney (including one for care and one for finances) so that they have the authority to make decisions on your behalf.

Another component is disability insurance. The coverage your employer offers is almost certainly inadequate, so you will likely need a separate policy. The policy should offer enough money to support you while you recover, so you don’t have to go back to work before you’re ready.

Estate Planning

Everyone needs a will. You don’t need to own anything of value to create a will, just as you don’t need to be married or have kids to decide who will inherit your money. Your will spells out your plans and wishes for your estate after your death, including naming an executor to take care of distributing your estate.

If you have any insurance policies with designated beneficiaries, you may want to change the beneficiary. While a future marriage would trump any will you created when you were single, that same marriage doesn’t impact your designated beneficiaries at all. Instead, it may be best to list your estate as the beneficiary.

Insurance Planning

It can be hard to save when you’re single. You still need to support a whole household but you have only one income to manage it all. And if you are diagnosed with a critical illness or you need long term care, your money may disappear in the blink of an eye.

Fortunately, critical illness insurance and long-term care insurance can lessen the burden. Disability insurance isn’t enough; it never protects 100% of your income. But the other two policies can provide cash to cover additional expenses, such as home care costs and renovations, and enough money to cover more care and support as you age.

To learn more about preparing your estate, contact us.

[1] https://www150.statcan.gc.ca/n1/pub/75-006-x/2019001/article/00003-eng.htm

[2] https://www150.statcan.gc.ca/n1/daily-quotidien/190306/dq190306b-eng.htm

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.