Marriages may have been made in heaven, but there is a lot going for singles today. Firstly, you don’t have anyone telling you what to do, and secondly you don’t have anyone messing with your plans.
This is a double edge sword though, and with no financial accountability, going overboard isn’t too difficult. You could be happily unmarried by choice, chance or circumstance. Irrespective of the reasons, here are five things every single person must do, to be truly financially independent.
1. Emergency Fund: Emergency by its very nature means an unexpected event. It could be anything from a busted tire, to a medical emergency, to dark days of a job loss. Having an emergency fund though, makes dealing with an emergency easier. All you need to ensure is that your funds are invested in an instrument offering good liquidity. You may keep aside at least six months’ expenses in a liquid fund. Also remember, that emergency fund can be built gradually and not overnight, using the SIP route of investment in a Liquid Mutual Fund.
2. Medical Insurance: Get a health insurance for yourself, even if your employer provides one. So even if there’s a job loss or you are in between jobs, you are still covered. Buy a cover of at least Rs 3-5 lakh as medical insurance and add up as you can for critical illness cover. Unless you have a dependent, do not invest in a term life insurance policy.
3. Retirement planning: Retirement planning is the third most important part of financial planning for a single person. Your EPF, PPF and NPS are good options to invest for retirement, but they are certainly not enough. Build a core retirement strategy with Mutual funds so that you can get equity exposure as well as diversification of asset classes, that too in affordable amounts via SIP.
4. Other investments: The next set of investments are to be made keeping in mind your financial goals; short term, medium term and long term. Avoid stock picking based on tips. A healthy mix of debt, equity and gold instruments, as per your asset allocations, financial goals and risk appetite is the key. If possible, consider buying a home of your own. An assurance of a permanent roof over your head, will give you a certain amount of confidence. Don’t go for something beyond your reach, else EMIs might become unaffordable.
Retirement planning is the third most important part of financial planning for a single person. Your EPF, PPF and NPS are good options to invest for retirement, but they are certainly not enough.
5. Nominations and wills: Don’t ignore this important financial task. Ensure that you have relevant nominations and a will in place. Even as a single person, if you have created wealth, or have assets, getting a will in place is a must.
6. Important Tip: Life as a happily unmarried person can be fun, if you have disposable income. Living it up can be really easy with credit cards, or easy credit available in the market. The biggest mistake a single can do is rack up debt in the early years. So, while it’s okay to actually live a little it’s equally important to not get into a debt trap.