Your relationship with money is one of the most important you’ll ever have – and when you live alone, getting on top of your finances is one of most important things you can do for yourself. Why?
We all have a relationship with money, whether we realise it or not. The health of that relationship depends on a lot of things – how we’ve managed our money in the past, how our parents, friends and wider families managed their money while we were growing up, how much we’ve been taught or have learnt about good money management techniques, and the beliefs we hold around money as well (for example, whether we are any good at budgeting, whether money matters and whether we deserve to have it, what money says about us as people and so on). These beliefs are also called ‘money scripts’ – in other words, the stories we tell ourselves which then drive our financial behaviours. A lot of the time we’re not even aware of how our approach to money today is shaped by our past experiences.
Having a healthy relationship with money means spending it in a way which genuinely enhances your quality of life, having little or no debt (or at the very least a manageable amount of debt), being able to save, making sound investment decisions, and having enough funds to see you through any difficult periods.
When you live alone, it’s even more important to get your relationship with money onto a positive footing.
The main reason for this is that the harsh reality – true for almost all solos – is that when you live alone, you are the only person responsible for looking after you. Unless you are fortunate enough to have family and / or friends able and willing to shore you up financially when you get into difficulty, you will have 100% of the responsibility for ensuring you have enough money month to month to cover your bills, expenses, nice-to-haves, and to invest in the future, with no fall back if things go wrong. While that sense of responsibility is true across many aspects of solo life, it can feel particularly daunting when you don’t feel as though you’re on solid financial ground.
The second reason is that many people living alone – and this affects women and younger people in particular, although not exclusively – haven’t developed basic money management skills and also struggle with financial accountability. This happens when someone else (for example, a spouse, partner or parent) has managed your money for you in the past, and / or has actively held you to account for how you’ve used your money. Without the right knowledge and skills, it’s easy to fall quickly into debt, which can be difficult to get out of.
Thirdly, an unhealthy relationship with money can seriously affect your mental health, your confidence, and your wellbeing – and this is the last thing any of us need while living alone. In an article for PsychCentral, clinical psychologist Joe Lowrance argues that ‘financial wellness is a component of overall wellness.’ Worrying about money is one of the single biggest causes of stress – if you can move to a place of feeling more financially stable, then you will not just feel better, but you will also be more able to focus on the things that really matter to you – your interests, passion projects, and the people you care about.
The good news is that effective money management skills can be learnt, even by people who haven’t got a good track record, and with some advice and creativity it is often possible to improve your financial situation – whether it’s through cutting costs, spending differently or smarter, finding ways to bring in more income, selling assets, trading time and skills, or a combination of the above. Moving towards a healthier relationship with money starts with confronting the reality of your current financial situation. Are you genuinely living within your means, or do your outgoings regularly exceed your income? What do you spend your money on, and to what extent do you feel good about the spending choices you make? What do you do with any money that you manage to save? How well are you managing your debt? Crucially, how do you feel about your current financial situation? If the answer is ‘stressed or anxious,’ then it’s time to seek advice and work out whether there’s anything more you could or should be doing to feel more financially secure. The links below are good places to start if you want to do a little more work on this.
The Money Advice Service https://www.moneyadviceservice.org.uk/en – UK service backed by the UK Government, however many of the content and tools will be useful to those living around the world. Tools include a Budget Planner https://www.moneyadviceservice.org.uk/en/tools/budget-planner and a comprehensive money management guide https://www.moneyadviceservice.org.uk/en/categories/managing-money
Advice UK https://www.adviceuk.org.uk/looking-for-advice/other-sources-of-advice/money-debt-advice/ – lists services available in the UK
MoneySavingExpert https://www.moneysavingexpert.com/ has reams of tips of cutting costs (UK focus)
The Balance have reviewed the best personal finance and budgeting software https://www.thebalance.com/top-8-free-personal-finance-software-choices-1293614 and apps https://www.thebalance.com/top-budget-software-apps-1293609
Money Management International https://www.moneymanagement.org/ is the largest full service nonprofit consumer credit counseling organization
Debt.org https://www.debt.org/advice/ is a debt help organisation in the US