Finance

Five Money Management Tips for Singles

Money-Management-Tips

You’re sitting at home, enjoying a day off. The sun is shining, so you think you”ll go out for a walk. At some point, you check the mail – bills, bills, and more bills. Suddenly, you’re thrown back into the reality of your financial situation. It’s awful. You know you need to sit down and figure out a solid, objective, money-management strategy, but you don’t know where to start.

First, Understand Your Relationship With Money

Money isn’t something most people talk about when they’re in a relationship or married. When you’re single, you just never think to talk about it with anyone. Who would you tell, anyway? Money is a private matter. Well, it’s about time you sat down and had a serious chat with yourself.

What is your relationship with money like, really? Are you a spender? A saver? Do you feel guilty anytime you make large purchases? Do you spend through your paycheck without really realizing where all the money went?

You have to be honest with yourself about your current spending behaviours. From there, you can start modifying them. But it all begins with knowing where you’re at right now.

Make A Budget

Making a budget doesn’t have to be difficult. All you really need is a documentation of all of the money you’re bringing in and all of the money that’s leaving your bank account. The easiest way to do this is to set up a spreadsheet on your computer and track everything you make and spend. This is something that takes practice. You must write down every single item you spend your money on regularly. For miscellaneous and “one-off” purchases, keep a monthly running tab for “entertainment” or “discretionary” funds.

Build Up Your Credit

A big part of money management is credit management. Over the long-term, ideally, you want to be able to borrow just about any amount of money (within reason) for just about any purpose. Start out small with a $500 credit line on a credit card. Practice charging it up and paying it off. After a year, request a credit limit increase.

Keep doing this while taking on small, but manageable, debts and pretty soon you’ll have built up a nice credit rating. Always keep enough money on hand in a savings account to pay off any outstanding credit balances.

Analyze Your Insurance Needs

Insurance is probably something you don’t give a lot of thought to. After all, your employer gives you health insurance, and while companies like Kanetix.ca offer Canadians private insurance, you always have the public healthcare system that doesn’t cost anything additional out of your own pocket.

And while you may not need health insurance, no one pays for your life insurance, critical illness coverage, and disability income insurance. All of these are important to protect your standard of living and pay off any outstanding debts if you die prematurely.

Don’t Rush

Whatever you do, don’t rush into anything. Insurance is complicated enough that you need to speak with a professional. But most budgeting can be done on your own if you’re willing to do the work and spend the time thinking about what’s actually in your rational best interest. Time. That’s the only cost, and it’s very much worth the effort.

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