Taking control of your finances includes planning for financial independence — being able to comfortably afford your lifestyle without being dependent on others or employment income. While we may never fully retire from all aspects of life, there will come a time when working should be a choice and being single shouldn’t hinder our financial security in retirement. Financial independence and security are crucial for everyone, but particularly so for single women.
Here are seven key strategies to help you build wealth and achieve financial independence:
1. Manage cash flow
Track and review your spending regularly to ensure your money is going towards what you want, aside from essentials like housing, car payments, and utilities. If you’re spending more than you’re making, it may be time to find ways to save such as refinancing your mortgage, cutting subscriptions, or seeking out discounts on major purchases. Get more information on managing cash flow: The Secret to Building Wealth? Know How Your Cash Is Flowing.
2.Build an emergency fund
Aim to save a year’s worth of living expenses. This fund should be reserved exclusively for emergencies like job loss, major repairs, or unexpected health issues. Avoid using this money for non-emergencies. Don’t limit yourself to traditional savings accounts — explore investing to take advantage of compounding (earning interest on your savings as well as the interest you accrue.) Examples include certificates of deposit (CDs), money market accounts, exchange-traded funds (ETFs), or money market mutual funds.
3. Contribute to tax-advantaged accounts
Maximize contributions to your 401(k) account, especially if you have an employer match. If you don’t have access to an employer-sponsored 401(k) — you’re self-employed or own a small business — look into an individual 401(k), SEP IRA, or SIMPLE IRA. Additionally, contribute to a health savings account (HSA) for saving money long-term by spending pre-tax dollars on medical items.
4. Diversify your investments
Balance your investments between real estate, stocks, mutual funds, bonds, and other securities. Consider generating passive income from your assets, such as renting out a car, backyard, or Airstream trailer. Explore ways to use your assets for both active and passive income. For more information on diversification and investment opportunities: The Role of Concentrated Positions in a Well-Diversified Portfolio.
5. Protect yourself and loved ones
Regularly align your insurance needs with your health, income, family, and household situations. Your needs will likely change throughout different life stages, whether you’re a young professional or nearing retirement. Don’t assume that you can cover every expense on your own; a significant event could destroy your financial security if you don’t have the appropriate insurance coverage.
6. Create an estate plan
Having an estate plan can feel very empowering. It’s another area of your financial life in which you have control. Decide who in your life will inherit your assets and make important decisions if you become incapacitated. Whether you’re married or single, have kids or not, you are in charge of your legacy. An estate plan can also help protect your wealth as well as your loved ones so they don’t end up paying significant taxes. Learn the foundation documents of an estate plan: Take Control of Your Estate Plan with 4 Essential Documents.
7. Consult a wealth advisor
Financial professionals can assist with your wealth management and help give you confidence in achieving your financial goals. Having a financial, accounting, or tax advisor is especially crucial if you’re a business owner. You can also consult with them on every area of your financial life, allowing you to focus on your loved ones, work, business, or other passion. Consider hiring an advisor like Mercer Advisors — 50% of our client-facing team are women so we understand your unique needs. We provide a comprehensive wealth management solution that includes financial planning, investment management, tax planning, estate planning, and insurance solutions.
Don’t put it off
How you handle wealth and financial independence now can have a big impact on your future. It’s never too late to start dominating your finances and looking out for your own financial wellbeing.
If you’re not sure how to achieve any or all of the above strategies and want to meet with an advisor who understands women and wealth, contact us.
Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. Diversification and asset allocation do not ensure a profit or protect against a loss. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER® certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
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