A Helpful Checklist for Single Women
- Prioritize your short- and long-term financial goals—such as next year’s vacation or a down payment for a condo—and determine how to save enough money to get there.
- Create a budget and stick to it. Watching your spending will help you reach your financial objectives sooner.
- Start saving for retirement now. Taking advantage of compounding interest will pay big dividends later on, so try to put 10 percent of your paycheck into your company’s 401(k) plan or an IRA.
- Take the time to become educated about investing.
- Begin saving for emergencies. Put away enough to cover three to six months of your expenses.
- Avoid credit card debt. If you’re already in debt, pay down as much as you can as quickly as you can.
- Think about buying a home or apartment as soon as you can afford it. You’ll not only build equity, but some of your mortgage interest and property tax is generally tax deductible.
- Look for ways to lower your taxes because single filers pay the highest tax rates. Contributions to 401(k) and Flexible Spending Accounts can reduce your taxable income. In addition, some of your IRA contributions may be tax deductible. Or, a Roth IRA—if your employer offers it—may be right for you. Contributions are not tax deductible but qualified withdrawals are income tax-free.
- Don’t take money out of your 401(k) or IRA if you can help it—in addition to paying income tax on the withdrawal, you’ll have to pay a 10% penalty on the withdrawal before age 59½, unless an exception applies.
- Make sure you have long-term disability insurance, either through your employer or on your own.
- Consider purchasing life insurance. It’s cheaper when you’re younger and although you’re single, you may someday have a family or relatives dependent on your financial support.