Saving money is especially important if you live alone. - o5com
The best thing about living alone is you get to do everything your own way. The worst thing about living alone is you have to do everything!
Whether you live alone by chance or choice, follow these simple steps to ensure your long-term welfare. By maximizing your income, saving for your future, and planning for the worst, you can live comfortably on your own.
Maximize each paycheck
- You may have too much or too little income withheld from each paycheck for tax purposes. You can adjust your withholding to maximize your monthly income while ensuring you don’t have to pay any money come April 15. The IRS has an online withholding calculator to help you determine how much money to have withheld from each paycheck. You need your most recent paycheck and your last income tax return.
Set Aside Money for Retirement
- Whether you are living alone for a short period or indefinitely, you need to plan for your retirement. It is best to plan for a worst-case scenario where you will be solely responsible for your retirement. You can use online calculators to figure out how 401(k) contributions will affect your paycheck so that you can both enjoy your income now and plan for the future. If your employer matches your 401(k) contributions, try to contribute enough to maximize the matching. While 401(k) contributions are tax deductible, you will pay income taxes when you withdraw money.
- IRAs are another way of saving for retirement. For singles, it is best to have both a 401(k), if your employer offers one, and an IRA to diversify your investments. Each retirement savings plan has different tax implications, so study the available offerings before deciding where to put your money.
Save for Emergencies
- Savings are especially important when you live on your own, as there may be no one to assist financially if you can’t pay your bills or face unexpected expenses. Aim to set aside 10 percent of your income, but if you can’t manage that, even 1 percent is better than nothing. Consider savings a fixed expense, like your rent or mortgage and utilities.
Insure Yourself
- Get long-term care insurance and/or long-term disability insurance. These cover certain expenses when you can’t work due to an injury or illness lasting longer than a few months. Long-term care insurance covers nursing nursing expenses for either home care or nursing homes. Long-term disability insurance provides income for other expenses when you can't work. They will provide you with security even if you don’t have friends or family who can help you. Even young adults should buy these policies, as they are often cheaper to get while you are young and accidents and illnesses can happen at any age.
Make a Will
- If you die without a will, the state will determine how your assets are passed on. Usually, your entire estate will go to your nearest living relative, even if that relative is your third cousin twice removed that you met once at a family reunion. Writing a will ensures that your estate will go where you want it to. You may chose to leave your property to family, friends, and charities you designate in your will. You should also make provisions for any pets you have to ensure they are cared for after you're gone.
- Designate beneficiaries for any life insurance policies you may have.
Plan for Problems
- Write an advance directive for health care. This can take the form of a living will or medical power of attorney. An advance directive ensures that, should you become incapacitated, your wishes for your treatment will be respected. The Five Wishes program from Aging with Dignity allows you to quickly and easily express your wishes on a form that is legally valid in most states. Be sure to discuss your wishes with whomever you designate as your decision-maker.
- Create a folder to hold all your vital information, such as your will, bank accounts, and property deeds. Keep this folder in a safe place, such as a safety deposit box. Let a trusted friend or family member know where you keep this information and how to access it in case of emergency.
- Carry emergency contact information with you at all times. This ensures that police and emergency personnel can reach your loved ones if you're in an accident and can't speak. Be sure to include at least two emergency contacts, including one person who can legally make decisions on your behalf. If you have pets, note this fact, along with contact information for someone who can care for them in your absence. Also include the name and phone number of your doctor as well as any special medical conditions emergency personnel should be aware of.
Copyright Anne Ackerman. Contact the author to obtain permission for republication.
Anne Ackerman - Anne Ackerman has 10 years' experience in journalism as a writer and editor. She writes clear, concise summaries of complicated issues.
