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YOUNG, SINGLE, AND BROKE
11/24/2017 8:59:18 PM
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Fund Library Q&A
Your questions about financial planning, investments, and portfolio management answered by an industry expert



By Robyn K. Thompson  | Friday, September 15, 2017




Q – Do you have any general financial planning advice for young, single people? I’ve already been working for a couple of years since graduating from university, and I earn good money. But I’m feeling like I’m unable to make ends meet every month and still spinning my wheels financially. – Maggie G., Calgary, Alberta

A – The first principle is that when you are single, the buck stops with you. You’re in the driver’s seat and you make the decisions.

Track income and spending

You need to get a grip on your income and your expenses – so you’re not spending that nest-egg on a Caribbean cruise, for example, or frittering it away on “impulse” purchases. There are many good budgeting apps and software packages available to help you analyze your needs and structure your cash flow so it’s not always flowing away from you. But sometimes you just need the human touch. A good financial planner can show you how to afford that cruise without denting your retirement!

First and foremost, as a single person, you should be saving 10% to 15% of your income each year for retirement. Set up your own Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP), and arrange to make automatic deposits directly from your bank account. Check with your employer to see if they offer a company pension plan or group RRSP.

Next, make efforts to increase your salary. Look for employment opportunities that pay more then you are currently making. Upgrade with continuing education courses or hire a headhunter to find a position where you can make more money. Don’t be afraid to move – go where the money is!

Do you have back-up?

For successful singles, where and how you live are cornerstones of the life you lead. Do you own or rent? A condominium? A house?

Living the chic urban lifestyle is exciting, but it’s expensive. To help defray some of the cost, consider taking on a roommate. It might cramp your style, but it will allow you to cut costs and free up some money for investing and savings. This is a short-term arrangement that can help you save thousands.

Do you have a mortgage? A car loan? And if so, do you have a plan to pay it off quickly? If you become ill or disabled, will you be able to continue living where you are, in the style you’re used to?

You definitely need to create an emergency fund worth three months of monthly expenses. It might seem impossible, but it’s not. Set up that automatic deposit method I mentioned earlier, and start putting money into a Tax-Free Savings Account to cover you against the unexpected. Purchase some disability insurance. As a single person, you rely solely on yourself for income, and if you were to be injured or in an accident, you could be faced with expenses you cannot afford.

Maximize any employee benefits you may be entitled to (major medical, dental, and prescription drugs, for example), and integrate those with carefully selected insurance products to ensure you’re fully protected in the most-cost-effective manner possible. Check with your employer to see if they have disability coverage for you, and if not, get some.

Get a plan, and stick to it!

Now, every financial blogger, journalist, and planning expert will tell you that you first need to create a financial plan. But that’s one of those obvious bits of “advice” that hardly anyone follows. It’s not hard to see why. Some of the advice you read makes personal financial planning seem like an exercise in a Level III CFA program. But not all of us care deeply about income statements, balance sheets, and debt-equity ratios. So, put off by the daunting prospect of all those debits and credits and assets and liabilities, many singles sadly never consider financial housekeeping until it’s almost too late. Then they find themselves with maxed out credit cards, collection agencies calling, and credit rating at risk.

It doesn’t have to be this way. If you’re not cut out for do-it-yourself financial management, there’s still hope! A financial planner can help you with budgeting and cash flow, saving and investing, and risk management, including a professional analysis of your insurance and healthcare needs. Look for a “fee-for-service” Certified Financial Planner (that is, someone with the “CFP” designation) in your area who specializes in small accounts. Ask friends for recommendations or referrals. Often, you’ll find fully certified planners at your local bank. Sometimes your employer will offer financial planning services as a benefit. Always take advantage of these! – Robyn

Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at rthompson@castlemarkwealth.com for a confidential planning consultation.

Notes and Disclaimer

© 2017 by the Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.

 
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