There are lots of benefits of being single, from the freedom it offers to being control of your own destiny. In addition, single people generally need to be self-sufficient and the financial independence that can come from this is positive.

Often, you will have little choice to be proactive and disciplined with your finances as you won’t have the safety net or support of a partner. It’s likely you’ll need to pay more attention to your wealth.

However, new research has highlighted the issues that single people need to face up to when managing their money. 

The recent Savings and Resilience Barometer from HL has found that single people living alone were less likely than couples to:

  • Have enough emergency savings
  • Be on track for a moderate income in retirement
  • Have enough spare cash to be resilient.

The research found that just 13% of single person households without children have very good financial resilience compared to 41% of couples with no children.

If you’re single, there are lots of practical steps you can take to improve your financial resilience. Here are five to consider.

Build up an emergency fund

Having an emergency fund you can turn to when the need arises is one of the cornerstones of a good financial plan.

It’s a fund designed to give you access to money if you really need it, for example:

  • If you have to pay for unexpected house maintenance, such as a new boiler
  • You have to pay an unexpected bill, such as car repairs
  • You face a short period out of work and need to maintain your bills.

Your emergency (or “rainy-day”) fund should ideally contain three to six months’ expenses, and you should hold it in an easy access account so you can get hold of the money quickly.

Having this safety net set aside means you don’t have to resort to expensive borrowing in an emergency. You have the reassurance and peace of mind that you can cover an unexpected expense, enabling you to plan for your future with confidence.

If you don’t have an emergency fund, or you have less than three months’ expenses saved, make this a priority.

Review your life insurance and health protection

If you only have your own income to rely on — of which a big percentage is likely to go on housing and living costs — protection policies become essential.

What would you do if you couldn’t work due to accident or illness? Would you be able to continue to pay your bills? Would you be able to manage on Statutory Sick Pay (SSP) which, in 2023/24, is just £109.40 a week?

If you’re self-employed, and you would not be able to generate an income if you can’t work, this is even more of a priority.

You might assume you can move back in with parents or rely on family and friends for financial support if you are unable to work due to poor health, but these may not be viable options.

If you’re single, you should make sure that you have sufficient illness protection in place so you can continue to meet all your regular commitments – including things like regular savings and your pension contributions – if you are unable to work for an extended period.

Many single people also assume that they don’t need life insurance.

However, if you have a mortgage or other debts, do you want to leave these to your next of kin – perhaps your parents – if you were to pass away? In addition, if the value of your estate is more than £325,000, you could also leave your loved ones a significant Inheritance Tax (IHT) bill to pay when you pass away.

If you don’t want to leave these debts, you should consider taking out some basic life insurance protection to ensure these can be repaid if you die. Single-life cover starts from just a few pounds a month and it can give you the peace of mind that you don’t leave your next of kin with financial worries were you to pass away.

Get an online life insurance quote now

Make sure you’re paying enough into your pension

When you’re single and you have financial commitments, it’s easy to prioritise the present over the future. However, it’s vital that you make sure you’re paying enough into your pension.

Money Marketing recently reported that a 65-year-old today can expect to spend an average of £11,000 a year on essentials such as food and housing in retirement. Considering you may enjoy a 15-to-20-year retirement, this highlights the need for single people to start saving for retirement as early as possible.

The problem can be particularly severe for single women, who often fare badly due to the gender pay gap. This pay gap can result in lower pension contributions than those of men, and a lower retirement income that needs to stretch further as women tend to live longer than men.

If you’re employed, it’s likely you are enrolled into your workplace pension. By law, you’ll pay 5% of your qualifying earnings into the pension (including tax relief) while your employer is required to pay 3%.

If you can, try and pay more into your pension – perhaps when you receive a pay rise. You may also find that your employer will match any pension contributions you make, and that could further boost your retirement fund.

Make the most of your tax allowances

When you have a partner, you can often plan your finances together to make the most of tax allowances such as your ISA savings allowance, and your Capital Gains Tax (CGT) annual exempt amount.

If you’re single, you need to make sure you make the most of any exemptions and allowances that are available to you.

Saving tax-efficiently into an ISA can reduce the amount of Income Tax and CGT you pay, while using things like your Dividend Allowance and pension Annual Allowance can help you to benefit from tax-efficiencies.

Working with an expert such as financial planner can add value here.

Have a regular review 

Regularly reviewing everything, from your mortgage rate to the cost of any insurance and utilities, can help to keep your monthly costs under control.

Taking an active interest in your finances and keeping your bills, investments and pensions under regular review can help identify early any changes that you need to make. 

Take time out every few weeks or months to review your regular outgoings to establish if you can make any savings. Always ensure you shop around for things like home and car insurance, and review the performance of your savings and pension annually to make sure they are working hard for you.

Working with a financial planner who can help you to keep on top of your finances can also help you to meet your long-term goals.

Get in touch

If you’re single, it’s vital that you put the right protection in place. As you read in section 2 above, protection gives you the reassurance that you’ll receive vital financial support when you really need it, enabling you to keep on top of your regular bills and outgoings.

To build your resilience, and to remain self-sufficient when it comes to your finances, get in touch with one of our experts. We can talk you through the various income protection, Critical Illness cover, and life insurance options available to you.

Alternatively, get a life insurance quote online today.

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