Financial planning for single women: what you must consider

While financial planning is vital for anyone, regardless of where they are in their lives, it’s particularly vital for single women for many reasons, such as the gender pay gap and the ‘singles premium.’ 

Single people are more likely to spend more of their disposable income than couples, whether on food, utility bills, rent, or a mortgage, as they cannot share costs with another person. 

They also won’t benefit from another person living with them who can help if the unexpected happens, such as losing their job or getting ill. 

According to Raisin UK, single Brits must earn £71,260 to afford the same lifestyle as the average couple, more than double the average of £34,963. 

So, how can you financially prepare yourself if you’re a single woman? 

We reveal some handy financial planning tips, although it’s also worth considering getting support from a qualified adviser to ensure you meet your long-term goals.  

How to plan your finances as a single woman 

It can be intimidating tackling your finances and preparing for your future goals, but being proactive and planning is key. 

We’ll now run through major tips to consider when building your financial plan.  

Understand your monthly spending and have a budget 

One of the easiest ways to start getting to grips with your finances is to look at your monthly outgoings to understand how much you spend on rent, bills and disposable spending. 

This can be a great way to identify areas where you can save money or maximise your savings and help you create a realistic budget.  

Build a large emergency fund 

An emergency fund can help tackle unexpected costs, such as losing your job, paying for urgent repairs, or dealing with surprise costs. 

It’s usually recommended that you save at least three months’ worth of your average spending, but ideally, set aside for six months if you can. 

However, if you’re a single woman, you should consider saving more – between six and 12 months. 

As you’re living alone, your costs are higher, and you may not be able to benefit from any immediate support.  

Consider getting insurance 

While insurance offers peace of mind for everyone, single women can benefit significantly.  

For example, life insurance pays out to your chosen beneficiaries or dependents if you pass away and can cover various things such as your mortgage or funeral costs. 

Income protection insurance can be handy as it offers a regular income if you cannot work due to disability or sickness. Critical illness insurance provides a lump sum if you are diagnosed with a certain illness. 

Start saving for retirement as soon as possible  

Everyone should start saving for retirement early, especially single women, as they’ll need to save more. 

According to the Pensions and Lifetime Savings Association, a single person needs £31,300 annually for a ‘moderate’ retirement compared to a couple, who need £43,100 every year. 

If you want a ‘comfortable’ retirement, these estimates will rise to £43,100 for a single person and £59,000 for a couple.  

Starting to save as early as possible means your pension can benefit from tax relief and compound interest, where you earn interest on interest, as well as employer contributions if you have a workplace pension.  

Clear your debt 

If you have any debt, particularly high-interest debt, you should focus on clearing this so you can put the money to good use, such as building your savings or investing. 

Have a credit card? It’s always a good idea to pay off at least the minimum amount every month, as interest can easily rack up.  

Consider investing 

According to Finder, around 11.4 million women have invested compared to 15.7 million men. 

Yet women may be better investors. Research from Warwick Business School revealed men fall behind their female investor counterparts by an average of 1.8% over three years. 

Investing is something everyone should consider as you can benefit from potentially higher long-term returns and compound interest compared to leaving your money in an easy-access savings account.

Get a will and plan your estate  

Planning your estate and having a will benefits anyone, whether single or married. 

With a will, you can ensure that your assets are left to your chosen beneficiaries, which is especially useful if you’re not married or have complex circumstances.  

Estate planning can also be helpful as you can use it to legally reduce the tax burden on your loved ones when you pass away.  

A financial adviser can help you plan your estate so you have peace of mind, while a solicitor can draw up a legally binding will.  

Consider multiple sources of income 

Having many sources of income can boost your existing income, which could be used for your future, whether it’s your pension, savings or investments.  

There are many ways to make money outside your main job, including renting out a spare room, selling stuff online, monetising a site, buying a property to let out or investing.  

Use all your tax allowances 

There are many ways to save on tax, thanks to tax allowances and reliefs.  

For example, if you have savings held outside of an individual savings account (ISA), you may be able to earn interest tax-free thanks to the personal savings allowance. 

The dividend allowance allows you to earn a certain amount of dividends before paying tax, while the capital gains tax (CGT) allowance can help you reduce the amount of CGT you must pay. 

If you want to get the most out of your money, a financial adviser can ensure you’re using all available tax reliefs and allowances and help you meet your financial goals.  

Consider financial advice 

If you have financial goals, whether you’re planning your retirement, buying your own home, or considering estate planning, a financial adviser can help. 

Unbiased can quickly connect you to a financial adviser regulated by the Financial Conduct Authority (FCA).