Whether you’ve already made a trip down the aisle or are happily single, it’s always a good idea to set yourself up for financial security. Not just so that you can live the lifestyle you want, but as a way of proactively looking after yourself should something go wrong. After all, things do happen. And whether by choice or by chance, the reality is that you may find yourself newly — or still — single years down the road, when support could be critical.
I wish I had better prepared myself financially, and there are some things I would love to go back and tell my younger self. For example, when I was 45, the unexpected happened and I became sick. I couldn’t work for three months. It was only then that I really understood the burden of disability, and the toll it took on my finances — and state of mind. When you get sick, the last thing you want to focus on is how you’re going to pay your next bill, worried about dwindling savings and mounting debt. And not having a partner meant there was no safety net when it came to shared costs or even emotional support.
With more Canadians living alone than ever before, delayed marriages and a high divorce rate, becoming financially responsible at an early age makes more sense than ever. And given that more than one-third (34.7 per cent) of young adults between 20 to 34 still live with their parents, it’s the ideal time to get a good head start on building your savings, and making smart decisions for tomorrow.
Even as little as $25 to $50 each month makes a difference in the long run.
Here are some money-management tips your future self will thank you for:
Get the best deal
I never thought of this when I was in university, but young people today can choose from a bigger and better variety of no-fee credit cards, with great options and perks. From earning cash back to points that can be redeemed for groceries or gas — these will help cut your expenses on necessary, daily items — all of which is helpful when your income is cut for any reason. Plus, if you love to travel, look for cards that provide travel insurance coverage when you pay for your trip.
Manage your money
People can get freaked out when it comes to talking about financial plans, but being in control will give you greater security. I used to get paid once a month, and by the third week I’d be calling up my parents for financial help. But years later when I was sick and off work, I no longer had that option. Create a budget and put a little bit aside for things such as a car, travel, education and any other goals you need money for. Actively update it monthly and keep track of where you’re at so you have a clear snapshot of what you’re earning, spending and saving.
Save for a rainy day
We’ve all heard it before, but this is something that I wish I’d done more of when I was younger — and the message really hit home when I was off work. Even as little as $25 to $50 each month makes a difference in the long run, but the rule of thumb is to save for three months’ worth of expenses. Have the amount taken directly from your pay and allocate it to a different account. Whether you lose your job or you’re a freelance worker with erratic cash flow, you’ll have money for unexpected costs, which will boost your independence and confidence.
Don’t bank on benefits
Many people think that if they have a group benefits plan through an employer, they are sufficiently covered for disability of any sort. But most benefit plans only cover up to 66 per cent of your pay, which is often less than you would need to cover your expenses. I was personally very lucky to be working for a company where my salary was fully covered, but this is increasingly rare and employers will only continue to cut benefits over time. If you’re not sure whether you have enough coverage, check with your human resources department and read through your employee benefits handbook. If you are working several part-time jobs and don’t have benefits, add up all your earnings and use an online calculator, then call an advice centre or speak with a family member or friend about your options.
Invest in insurance
According to Statistics Canada, one in three working Canadians will become disabled for 90 days or longer at some point. Disability is also higher in women than in men across most age groups, and tends to occur earlier in life. Accidents and other things can happen even if you don’t get sick, and many people don’t have enough savings to last more than a week without work. I didn’t purchase disability insurance and if I’d had to rely on an average employer’s benefits plan, the financial strain would have been considerable. Insurance is a key component to a sound financial plan, and the good news is policies are much less expensive the younger you are; the monthly cost is less than a manicure or lunch with a friend.
Not long ago a young employee I worked with was diagnosed with cancer. She was only 28 years old and newly married. Her treatment and recovery were extremely stressful both emotionally and financially; even with a husband she quickly found that money was tight based on what her benefits package provided. Thankfully, she’s since returned to work and is in remission now, and is expecting her first baby. She was lucky — relying on the support of her husband, family and friends. But she learned her lesson and has shared her story widely with the company as a cautionary tale for others. Something I’m doing, too, because us ladies — single or not — we have to look out for each other.
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Author: Cathy Preston