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Finances and being single – how to avoid the poverty trap

15 October 2014

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According to figures from the ABS, as at 2011, 41 percent of us in Australia are single and the numbers are rising. (In America, for the first time, according to statistics quoted in the media, single people are in the majority.)

Whether this very significant trend is due to divorce or the death of partners or people choosing to stay single, it doesn’t matter. There are real implications for our finances – some good, some bad.

We know from research we’ve done at Ruby over the years that younger women, for example, are waiting longer before they choose to marry. So are men.  We also know that older women who are divorcing are very likely to be left under-resourced financially. I call that situation: Sexually Transmitted Debt. We also know as women, whether single or coupled, our superannuation has invariably suffered because we’ve had time out for caring duties, including having children.

(Or, as happened to me, a poor financial decision when I was in my 40s meant I had to recalibrate and rework my super, which is now on track.)

No matter your age, taking a look at and devising a strategy for your super is important.

The ASFA Retirement Standard quotes singles needing retirement income of $42,433 a year to live comfortably and couples need $58,128 and that’s if they own their home.

Super means different things at different life stages and ages, but in the long run, super is about saving. Putting even a small amount extra from a young age will make a big difference.

The lesson I take from super is that by getting into the habit of putting money away you can build a foundation that will help you in the future and learn the habit of saving.

For example: if you are thinking about buying your own place and having that as one of your assets then coping on your own with the deposit and mortgage needs some planning. You need to think about a savings plan and the earlier the better. It also pays to diversify and not have everything tied up in your home. Investment in super, business and other areas outside of super make good sense.

If you rent on your own it can be expensive and sharing with others can be difficult. Again it comes down to age and stage and planning for what you want – which means budgeting.

Knowing what your incomings and your outgoings are (including credit cards and loan repayments), and ensuring the former – your ‘incomings’ - remain in the black, makes positive financial sense.

One sure way to ensure income is to insure your livelihood: life insurance even when you are young and without dependants is a good idea; income protection and TPD are a must if you have dependants.

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