Jane Austen’s Pride and Prejudice gifted us with this oft quoted first sentence: “It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.” This may have been a universal truth in 1813—at least in the mind of Mrs. Bennet—but I don’t think it is a universal truth any more.
What is a universal truth? It’s time that single women take control of their money. According to the most recent data available from the U.S. Census, an estimated 45.2% of U.S. residents 18 years and older were single (meaning never married, widowed or divorced). Of these, men made up 46.8 % (and women 53.2%).
Why women made up the greater percent I don’t know but my guess is women’s longevity has a lot to do with it. A woman who is age 60 today is expected to live a full three years longer—to age 86.2—than a man the exact same age.
No matter the reason, it’s apparent that even if there are men out there are “in want of a wife” they aren’t doing a very good job of addressing the issue. Given this, I think it is time to update good old Jane:
It is a truth universally acknowledged, that a single woman better be in possession of a good fortune if she wants to retire some day,
must be unless she is in want of a wife in which case it may work out okay.”
If you have been waiting until you are partnered to pay attention to your finances, here are three reasons for single women to take control of their money today.
You Don’t Know When Love Will Happen
Love is possible at any age—I only have to tune into the Hallmark Channel for proof of that. But the passage of time is a certainty. You may perceive this as a bad thing when it comes to your love life—crows feet, gray hair, and sagging everything—but when it comes to your money, time is your friend.
As I discuss in Should You Stop Investing While Getting Out of Debt?, money invested provides you with a return on your investment. That return is then added to the original pot of money and also earns a return. This is the magic of compounding.
The sooner you start investing, the more compounding works in your favor. You can still benefit at a later age so if you are older and haven’t started yet, don’t despair (but do start ASAP!). But if you are early in your career, putting away even small amounts will serve you well.
Another downside to waiting is that you may experience lifestyle inflation that will make it harder to save later on. I am guilty of this.
While I did start saving between 10% and 12% of my salary at a fairly young age—when I was 28—as I made more money, instead increasing my savings rate, I added that money to my disposable income. If I had continued to live off of the same amount, and directed the additional salary toward my retirement savings, I would have so much more saved right now (I don’t know the exact amount because the math is too depressing!).
You Don’t Need a Partner To Figure Out Your Money
If one of the reasons you have waited to get started saving for retirement is that you are afraid you will “do it wrong,” I have great news for you: managing money isn’t that hard. Really!
You’ve heard of Warren Buffet, right? One of the richest men in the world? Given how well he has done managing his finances, I feel pretty safe taking his advice. And you know what it is? Invest in low-cost index funds. That’s it. Not too complicated, right?
If you have access to a retirement account at work, like a 401(k) or 403(b), start contributing as much as you can—even if it is just $50 per paycheck—and direct the money to into a low cost index fund. What funds you have access to will depend on your plan but most likely there will be at least one option.
At my work, I have access to a fund that tracks the S&P 500 Index, which means that one share includes tiny bits of each of the 500 companies that are part of the Index, and the amount of each company in the share is proportionate to that company’s representation in the Index. So, for example, if Google accounts for 1/20 of the value in the S&P 500 Index, it will also be 1/20 of the share I buy.
And, because the funds track an Index, they don’t need an active manager (someone who picks the companies that make up the fund). This keeps costs low.
Don’t have access to a fund at work? You can open a Traditional IRA (money goes in pre-tax) or a Roth IRA (money goes in after tax) with a company like Vanguard and buy low-cost index funds through that. Since you can only contribute up to $5,500 a year to an IRA, if you have more to save—which would be great!—you can also fund a brokerage account with after tax money.
Once you get started, there is a lot more you can learn IF YOU WANT TO. But if not, that is okay too. What is most important is that you started on a solid path.
Waiting Isn’t Fair to Your Future Partner
A final reason to not wait is that in doing so, you are putting a lot of pressure on your future partner, and likely—given that money is one of the most common reasons couples fight—the relationship itself.
First off, your future prince or princess may not know anything more about managing money than you do. Or what they know may not be right (generally or for your circumstances specifically).
Second, they may bring a lot of financial liabilities to the relationship that make combining finances right away a bad idea. If you blindly hand over planning and the relationship ends, you may be a lot worse off.
These examples aren’t meant to encourage you to be suspicious of your new guy or gal (I will leave it to Dateline to do that), but to illustrate why you must be a partner in managing the finances.
What Made You Take Charge?
I don’t know of a lot of “universal truths” but if I had to propose one about single women and money it would be that they can’t wait for their love life to be set before focusing on their financial life. The stakes are just too high!
Let me know what helped you to stop waiting in the comment section below.
© 2017-2018 Good Life. Better.
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