When you are single, personal money management would seem, theoretically, less complicated. Think about it; there are no arguments over spending or savings strategies or having to focus on the present circumstances of providing for a partner or an entire family. There is no walking on eggshells and being accountable to anyone except yourself. However, solo sailing isn’t always that simple.
Spending money is as easy for a single person as it is for a married couple. There is so much out there that make our lives more comfortable and exciting, and those things cost money. Single people enjoy eating out, streaming entertainment, traveling and they may also engage in the dating scene. Those flying solo have to make as much of an effort as a couple when it comes to financial management.
Here are several money management tips that singles might consider:
Nobody is more interested in your possessions than you are.
Bestselling finance author Morgan Housel once said, “Nobody is as interested in your stuff as much as you are.” Contrary to what you might believe or like to think, people are not concerned with your possessions in terms of being impressed. If someone has, for example, a big house or fancy car, as Housel explains, you aren’t impressed by them. Instead, you are picturing yourself in that house or driving that car, imagining people thinking you are “cool” or “successful.”
People are interested in their stuff, their problems, that upcoming vacation, or the new pair of shoes you bought for that Friday night date. Don’t try to keep up with the Joneses. Buying things because you think it might impress other people is not a beneficial approach to financial management. It is nice to have luxury items, so long as you can afford them. Remember, buying on credit doesn’t mean you can afford it.
Pay down your debt before other unnecessary expenditures.
The world of personal finance, debt, and debt management are so much a part of life that it can be argued we are desensitized to the impact of having debt. It is also no secret that people are accumulating more debt than ever before. According to Bankrate, about six in 10 people with credit card debt have had it for at least a year, and the personal savings rate is a mere 3.2%. So, not only are people holding onto debt, but they also aren’t saving much. It begs the question, where is the money going? At the end of the day, it is hard to build wealth when you have a lot of debt.
If the prospect of abnormal gains on the stock market seems outrageous, it probably is.
Only invest what you are comfortable losing. The stock market is not the lottery. It is not a dependable, get-rich-quick scheme. The stock market is a slow growth, long-term investment that takes decades to produce gains. Most people, however, don’t have the patience to wait for gains of any kind. Instead, they speculate, jump on bandwagons, and panic sell their stocks when it seems the market is on the way down. People are predictable, but the market is not.
How well do you know yourself and your triggers?
One of the maxims inscribed upon the Temple of Apollo in Delphi sometime before the 4th century has notably stood the test of time: “Know thyself.” Two words that make up one of the world’s most profound statements. When it comes to your finances, recognizing what “triggers” your spending can help you create short- and long-term financial strategies.
Your friend buys a new car, your sibling moves into a larger house in a nicer neighborhood, there is talk on TV about a possible bullish market, and specific companies are projected to have great earnings calls, etc. What is it that motivates you to spend money? Who are you? What did you experience in your past that perpetuates certain spending habits? Financial behaviors are not always on the surface.
You often hear people talk about budgeting, but not how to budget.
Merriam Webster defines personal financial budgeting as “the amount of money that is available for, required for, or assigned to a particular purpose.” Budgeting should be looked at like healthy eating. The destination is forever. Budgeting is not a temporary fix to problems, but a lifestyle change that you adopt while learning to live within your means.
Take the time to consult a financial professional.
In TV commercials, you often see couples meeting with a financial professional to discuss their financial goals, however, if you are a one-person household, don’t let this deter you. A little financial guidance can benefit anyone, and singles don’t have to go on this potentially complex and challenging financial journey alone. Now is the optimal time to meet with a financial professional to get your finances in order and to create strategies in pursuit of your financial and retirement goals.
Sources:
Know Thyself: The Philosophy of Self-Knowledge – UConn Today
Housel, Morgan. Psychology of Money. Lulu Press, Sept. 2020.
Budget Definition & Meaning – Merriam-Webster
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risks including possible loss of principal.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
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