The MapleMoney Show » How to Save Money » Budgeting

Managing your Finances as a Single Person, with Jackie Porter

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Is life more expensive when you’re single? To help answer this question, I invited Jackie Porter onto the show this week. Jackie is an award-winning financial planner, best-selling author, and speaker who has helped thousands of clients grow their net worth, build a fortress around their finances and keep more of their cash in their pocket.

She also co-authored the book, Single by Choice & Chance, so she understands very well the challenges single people face when it comes to their finances. The stats show that it’s more expensive to live on your own. Perhaps the main reason is that singles lack a key financial advantage many couples have – the ability to earn two incomes while sharing key living expenses, such as housing and vehicle expenses.

Fortunately, it is possible to thrive on a single income, but doing so requires some planning. That’s why Jackie recommends that singles get connected with someone they trust when they need help with their finances.

This is especially true if you find yourself unexpectedly single, due to divorce or the death of a spouse. Either of these situations presents a unique challenge with which people often struggle. According to Jackie, women are 3-5 times more likely to end up in poverty after a divorce, a sobering reality. If you happen to be single, by choice or by chance, this episode is for you!

Our sponsor, Wealthsimple, believes that financial independence should be available to anyone. That’s why they have no account minimums, meaning that you can get started investing for as little as one dollar. Don’t delay any longer, invest online by visiting Wealthsimple today.

Episode Summary

  • Why it’s more expensive to be single
  • You need to think about an emergency fund as a single person
  • Singles are expected to care for their aging parents more often
  • Many single women lack confidence in their personal finances
  • One of the keys to managing finances is being able to stay organized
  • There aren’t a lot of tax credits available to singles
  • Questions to ask a prospective financial planner
Read transcript

Is life more expensive when you’re single? To help answer this question, I invited Jackie Porter onto the show this week. Jackie is an award-winning financial planner, bestselling author and speaker who has helped thousands of clients grow their net worth, build a fortress around their finances and keep more of their cash in their pocket. She’s also coauthor of the book, Single By Choice and Chance so she understands very well the challenges single people face when managing their money.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Our sponsor, Wealthsimple, believes financial independence should be available to anyone. That’s why they have no account minimums, meaning that you can get started investing for as little as one dollar. Don’t delay any longer, invest online by visiting maplemoney.com/wealthsimple today. Now, let’s chat with Jackie…

Tom: Hi Jackie, welcome to the Maple Money Show.

Jackie: Hello. Very nice to see you here.

Tom: Well, thanks for being on the show. I wanted to walk through how it’s different and how we can make it better as a single person in personal finances. The first thing I think I want to hop into is what are the issues? I think the biggest issue off the top my head has to be the lack of dual income. Obviously, there’s dual income when you’re married, but then you also have the dual income where there are no kids. That’s where you’ve really hit the jackpot. What is it like for a single person to not just survive on a single income but actually be able to save?

Jackie: Well, I think you hit the nail on the head. The stats show it’s definitely more expensive to be on your own. When you’re in a couple, you’re sharing a lot of costs. It doesn’t cost double if you’re renting an apartment. You share a lot of cost between two people. If you’ve got two incomes, that gives you way more opportunity to save. Now a single person living on one income, paying all of the same bills and on top of that trying to figure out how they can save. I was a single person, of course, until I wrote a book about the subject. But I was always keenly aware of how vulnerable I was personally because, God forbid, I get sick. I have no one to rely on. There’s no secondary income if I lose my job. How do I continue to pay my bills? For a single person, having an emergency fund is that much more important because you are your retirement plan. You are your emergency plan. You are your debt repayment plan. All of those things you’re having to do with only one income. So having your emergency fund is one of the things I think you have to think about as a single person. As you said, finding money to save after paying all of the bills is a big challenge because you’ve got that much less money to work with when you’re the one paying all the bills. The facts bare out because if we’re talking about single women we make less. And as a single person, you’re most likely to be asked to do the caregiving for an aging parent because people just assume you’ve got time. Women in general, but single women as well, are the biggest benefactor of low income, guaranteed income supplements. We’re typically in retirement in our 60s. We are the largest benefactors of that income that pension income you receive if your income is below a certain level which something like $16,000. As women in particular, we have to think carefully about the importance of how we protect ourselves from some of these issues. I think one of the ways we have to do that is to be very careful when it comes to spending money and looking carefully at our expenses. Looking really, really closely. I know there are lots of people who get their credit card statements and don’t open it. They just put money toward it. But we have to pay really close attention to how much interest we pay, because my mantra is, “Why pay interest when you can earn it?”

Tom: One of the things I found when I turned my finances around was when I got married and having a kid on the way. Those kind of life events made me feel like it was time to get responsible. When I was single throughout my 20s, just barely into my 30s, I think it would have continued where I wouldn’t feel that need to be responsible. What makes a single person hit that? It is it just age? Maybe I’m putting too much on these life events, but what makes someone think they’re doing it for a different reason?

Jackie: It might be age. A single person with kids, definitely. As you said, it’s more top of mind. There are a couple issues, especially, if we’re talking about women. There is a confidence gap when it comes to women not feeling confident about their finances, not wanting to deal with their finances or not prepared to take responsibility or control of their finances. I do this marketing campaign where I talk about how I’d rather go shopping than deal with my retirement or finances which is the opposite of what you want to do if you’re trying to really address those issues. If people are waiting for a milestone—I think you kind of have to make that decision. You have to change your mindset because a lot of women report not feeling confident, feeling anxiety about their financial circumstances. So at the end of the day, if that’s the case, you need to make the decision to deal with it. That you want to do something about it. And it’s important enough to you that you’d rather do something about it than worry about it. Because it actually feels better to do something about it than to worry about it or avoid it. What you don’t want to be, Tom, is that person coming to my office at 55 or 60 who hasn’t really looked at their credit card statements, who have no idea how much they have saved in different investment accounts. Someone who is hoping they will be okay for retirement even though they’ve never really look closely at it. The earlier you start looking into these things, the more options you have.

Tom: Yeah, that’s a problem across the board. If you’re not looking at your finances, even not knowing just puts you in a bad mental space. Not so much with finances for me right now personally, but just being organized in general is still something I can struggle with.

Jackie: Speaking about struggling to stay organized, there’s so much paper. Even if it’s not paper now, you’re getting emails from everywhere and there are all the different things you have to stay on top of. The key thing is you just have to sort of look at your mind and prioritize the things you can do. I have like one day a month where I do my receipts, and I pair it with something I like doing like watching a movie. I’ll catch up on some of my Netflix greatest hits and do something I loathe doing like going through all of my receipts to get them organized to give to my bookkeeper. I pair it with something I like. And that’s the last Sunday of every month.

Tom: That’s a great idea too, because sometimes the common advice with couples is to make a date night once a month to go over finances. I like this idea of a single, friendly way instead of saying, “Oh yeah, let’s just have a date night,” because it doesn’t apply to everybody.

Jackie: No, it doesn’t. So it’s kind of like making a date with yourself to deal with the bills. I pay my bills and get my receipts done. What I try to do is basically clean those receipts out of my purse. It’s actually easier these days because I’m not meeting people for networking so it’s actually a lot simpler. It’s dealing with bills that were associated with the expenses of the office. I just go through all of those once a month. It’s easy to do and I get to watch a movie. It’s not that engaging work. You just need to kind of check boxes, tick stuff off and make sure everything aligns. I take that day to sort of go through all of my banking stuff. But you can’t let it go more than a month.

Tom: Yes, I’m a big fan of just picking a date to get something done no matter what day of the month. It can be on the 20th of the month or whatever but I’m going to do the thing. It will go so much further because then you’ve actually set in stone that you’re going to do this instead of letting it just continue and continue.

Jackie: Yes, absolutely. Set a schedule for all of your financial to-dos and set a deadline for all of the financial priorities you have. It’s like a goal. But what’s a goal without a deadline? If you’re someone listening to this podcast and you’re thinking, “I’m a single person. I don’t want to deal with it but I’m worried about it,” then decide today that it is something you’re going to make a priority and then put a deadline on it. Say, “Okay, these are the goals. I want to learn more about my investments, look at the interest I’m paying on my credit cards and what can I do to pay less?” Whatever that is.

Tom: You mentioned GIS earlier. That’s a great program that will help support single women with lower income. But it seems sometimes it goes the other direction. There’s a lot of tax benefits around having a spouse, having children and your children’s activities. What are your thoughts on that? Both the negatives for someone that’s single, but also are there any positives? Are there any tax benefits people should be looking for?

Jackie: You made a very good point, which is, yes, you can income split with a spouse. There’s are a lot of things you can do with a spouse. But having said that, let’s say a single person with no children (which would be my circumstance) that doesn’t necessarily mean that because you don’t have traditional income splitting opportunities, you have the ability to decide on what tax planning opportunities are available. One would be maxing out the TFSA account. If you max out your tax-free savings account—let’s say it’s $65,500 right now, if you grow that over time and withdraw that, you will never pay taxes on that. The less we can do about the taxes we’re paying today, the better because the government doesn’t give a lot of tax breaks for single people outside of charitable giving. If you are someone who had never given to a charity before, there is something called “super tax credit for a new donor to a charity” so that might be something to investigate. If I’d never give it to charity before, this is an extra tax credit that you can get on top of your regular credit for making a donation. Beyond that, it’s more tax planning. Basically, it’s how can I reduce the taxes I’m going to pay in the future? And if there’s ways now that I can save on taxes, investigate those options. The other thing I do as a single person is look at how I can get tax benefits not just as a single person but as a self-employed person? Or you could be someone who starts a business on the side like a side hustle. Side hustles are great for helping create new tax deductions. It could lead you to that additional income. If you’re thinking (as a single person) that you’re not making enough, that might be a way to kill two birds with one stone. You could make a little bit more money and get some tax breaks by using the self-employed tax breaks. So that’s something to consider as well as starting a business for another stream of income.

Tom: Yeah, a, I’m a big fan of additional streams of income, whether single, married or whatever. It’s the way to get ahead. We talked a lot about being single, but what happens if you’re single later in life? Say you were married for a while and you get divorced? How does that look different with any clients you’ve dealt with? What’s unique about going through a divorce and finding yourself single later in life?

Jackie: I would say, first and foremost, single women who become what I call in my book, “single by choice or chance,” women who become suddenly single actually suffer more financially than women who expected to be single. It’s just because of that mindset piece. If you had a spouse who looked after things, paid the bills and you didn’t work outside of the home and a lot of the financial decisions were made for you, you might have gotten comfortable in that situation. You never thought you’d have to worry about it. So if all of a sudden divorce comes out of nowhere… Or even you become single because of widowhood, you’re thrust into a scenario where you never built any resilience to learning about money, to becoming financially single, financially successful or financially strong on your own. You’re put into all of these scenarios that you’re not necessarily comfortable with. And now you’re expected to figure it all out. What ends up happening, particularly for women in a divorce, if you didn’t make the financial decisions and you have no idea where the money is, you could be at a disadvantage in terms of negotiating. Divorce is one of the most stressful scenarios you can go through in life. Now you’re dealing with kids who might be caught up in the whole negotiation, they’re stressed out, you’re stressed out, and you might be dealing with a spouse who is, really reticent on giving you what you’re thinking (or your lawyer is saying) is a fair settlement. This is well documented where women sign on the dotted line just to get it over with without ever doing the math because they don’t understand how important the math is and have never had to lean into the math. When you take responsibility and have that mindset that this is your life, you’ve got to figure it out. You’ve never really understood the importance of leaning it to the numbers, into the math, you could find yourself in a very precarious financial situation at the end of all of that because you didn’t expect to be in that situation. Divorce can be financially, as well as emotionally, devastating for women. Women are three to five times more likely to end up in poverty after a divorce, especially with children.

Tom: Yes. And you mentioned retirement. Let’s say, even if you become a widow, it’s a great point to make because so many couples talk about “our retirement” and I don’t think anyone should consider retirement a “couple” event because, first of all, you rarely retire on the same date. So you’re not even starting retirement at the same time and you’re not going to die on the same date either. So it’s two individual retirements.

Jackie: You’re 100 percent right. And that’s actually how I approach it when I’m dealing with couples. As you said, their birthdays are different and they’re not going to have the same retirement date. You’re working towards having a certain lifestyle together but you should be saying, “Okay, if I make this, I’m going to earn this. I’m going to have this much of an income in retirement.” That’s different than saying, “We’re going to have this much of a lifestyle together in retirement.” If you know how much you’re going to earn after tax, you know what the lifestyle could be in that scenario as well. And when we’re talking about people planning, even as a couple, typically you should have your “me” account and your “we” account. And your partner should have their account as well. For retirement, that could be one of the “me” accounts you’re putting money aside for. And you should know why you’re putting a specific amount away to get a certain income that you need as a part of that relationship, but also for yourself to have the retirement that you need. When I’m planning for couples, there’s a lot of things to factor in if the person isn’t there. How is that going to impact their retirement? Are you having those kinds of conversations with your advisor? What does that look like if the person isn’t in the picture? How do we mitigate for that? I think that’s one of the things that came out when the research came out, people who plan to be single do better because they’re expecting the unexpected. And that’s what resilience is all about—how do I plan for that? Because it’s way more financially devastating to expect that everything’s going to work out. Like, here we are in COVID. We already know that that can be true, right?

Tom: Yes, exactly. And speaking of COVID, one of the thoughts I had with this was having support. Me with a spouse, I’ve always got someone I can bounce ideas off of. What should we do with this money? What’s our next goal? How are we going to work towards that? If you’re a single person, what does support and mental health look like nowadays with not only COVID but also just needing someone to talk to? Should they see a planner? That would certainly makes sense. But they need someone they can kind of trust even if it’s just their ideas. Sometimes they might actually know their money quite well, but it’s still nice to bounce it off someone.

Jackie: I have a lot of clients that reach out to me. As I said to you offline, Tom, that’s one of the reasons I call myself a confidant. You definitely need to reach out to someone that you trust. Financial planning isn’t just a transactional relationship. It should be a scenario where you’re working with somebody you can talk about some of the real money issues. We are in a time with COVID where people are having real financial challenges. And it’s not just about rate of return. It’s about wondering if they can afford to keep their business open. Or what would it look like if they downsized? Maybe they’re going to have to take time off; because they’re taking care of an aging parent. When they come back, what does that look like? There are major questions that people need answers to during this time period. And it’s not just about rate of returns. If you’re dealing with a financial professional, you need to feel like you can talk to that person about things you’re really concerned about where money is concerned. If you don’t have that sense, or you have that gut check that this is a transactional relationship and that’s not what you need, then I would recommend you keep looking. In this time in particular, it’s so important to be able to have authentic relationships. You were talking about mental health. I did an Instagram life a few weeks ago that was just talking about single people during COVID that are truly suffering. Especially because of the isolation factor. You can’t see your friends. You can’t necessarily see your family. Maybe you can see them over Zoom, but it’s not the same as having belly-to-belly conversation with somebody. What’s really important is to stay connected to your social network, especially during COVID. And if you’re okay, reaching out to somebody else in your network who may not be as diligent in calling as you, that’s one of the key steps you can take to protect your mental health. Even more than seeing a therapist is staying connected with your social circle. That’s really important. And having people in your network you feel like you can talk to. And if we’re talking about on the financial side, speaking to somebody you consider in your “circle of trust” from a financial standpoint, someone you can talk with about things that really matter, that you feel comfortable telling your financial truths to, that’s good. If not, get a referral. Look around them. Vet them. I’m happy to provide your listeners with questions to ask someone to get a sense of, “What do I need to understand about who you are as a person? What are your credentials? How do you approach financial planning? What’s your process? How do you get paid?” I’m happy to send a link to all of those things to your audience because I think it’s important, especially now, to deal with somebody that is going to be looking at your big picture, your financial picture at a time like this, especially.

Tom: I will be sure to include that in the show notes. Thanks. That sounds great. Just something where people can kind of see what to look for. So if someone is single and maybe they haven’t taken care of their finances so great up until this point, can you just kind of run us through some first steps? What should someone do if they’re realizing this is where they are; they’re single, they’re in COVID. They’re dealing with everything. What’s next?

Jackie: COVID is kind of like this mixed blessing. It’s all of these things that aren’t great. But then you kind of have to try to find a little silver lining too. I was sharing this with an audience I spoke to last week, about growing up from very humble beginnings and not having a lot of cash and learning to live on very little. I remember buying lots of secondhand clothes. And you know what? Who knew that many years later they would be fashionable? Anyway, the time period I lived through from my teens to my 20s, I’m still pretty much a thrift shopper. I love that. But learning how to live on little is a skill I’ve developed my whole life. I didn’t get a chance to go out to eat much because I had no choice. I had a lot of meals at home. When I think of this time it reminds me of COVID. It’s kind of like living COVID, right? I think for people who are out there, no shame, no blame, whatever happened in the past, happened in the past. Turn the page today. The key thing is to do the math. Lean into what’s going on in your financial circumstances now. Maybe you started off the year thinking you were going to spend money on travel. Travel could mean traveling to another country, but it could also just be going to and from your job. And now you’re working from home so your expenses might have changed during COVID. Maybe you thought you’d be spending quite a bit more seeing friends and family, going out to dinner, and doing all of that stuff. This is a really crucial time to look at the map, look at your expenses. Look at what you plan to spend versus what you actually spent. Write down all of your expenses. Write down how much is coming in. Once you have that number, if you want to do a little bit deeper, look at the last three months of your bank account and your credit card or line-of-credit statements. See if what you think you’ve spent, is actually lining up with what you actually spent. This is a good place to start because it’s not about what you make. It’s what you keep. There’s a lot of programs out there as well for people who, if they’re running behind on their mortgage, can defer their mortgage or defer loan payments. They might have an opportunity to defer some of their rent. There’s a lot of programs that the government offers. Are you taking advantage? There’s even programs for small businesses with opportunities to access funds through different small business scholarship funding programs. So sit down with your accountant, your financial planner and see what you’re entitled to. If you don’t have one, start with those steps of figuring out what you’re earning. Figuring out what you’re spending and figuring out what interest is also costing you. Open up those statements and see how much interest you’re paying on these different credit card vehicles or different credit sources that you have. And then look at ways you can (with a planner or on your own) pay as little as possible. Can I get in touch with the bank and negotiate a lower rate? Can I switch or consolidate debt? This is the time to do that. We’re in a low-interest rate time with the economy sputtering a little bit. It’s trying to get back going. The bad news is the economy isn’t doing as well. But the good news for you is, this is an opportunity to get a lower interest rate. And it could be consolidating your debt into your mortgage as well. These are all opportunities on the table for you now. So don’t feel bad about the past, turn a page. What can you do tomorrow to make your circumstances better for yourself and your family?

Tom: I love that. And thanks for the advice. Can you let people know where they can find you online and what you’ve been up to?

Jackie: Yes, absolutely. If you want more information, we offer something called, “What’s Your Financial I.Q.?” It’s at three-minute survey if you want to get a number of how well you’re doing. We actually give you a grade on how you’re doing in different areas. Check out our, “What’s Your Financial I.Q. Service.” It’s a free service. The other option you have as well on our website is to choose the full assessment where you go on a one-on-one coaching with somebody from my team or myself. We will coach you through some of the best practices on how you can improve your financial I.Q. We’ll give you a half an hour call, complimentary assessment. So feel free to check us out, askjackie.ca is the website. You can go right onto the site and just click on the link for What’s Your Financial I.Q. and decide which journey you want to go on. Do you just want an assessment or do you want a guided assessment with some best practices?

Tom: And tell me about the book, too.

Jackie: Oh, yes. The book I wrote is called, Single By Choice, By Chance; The Smart Woman’s Guide to Living Longer, Better. What I love about that book—and I know I’m biased, is it’s different stories about women and how they become single and what you can learn for them. It’s not a dull, boring, book on finances and being single. There are a few chapters of the book that are done through stories. I wrote this book with my one of my mentors and coauthors. We wanted to do a lifestyle book that also covered money. So it’s about your life journey and also your money journey. It’s what you need to know, especially from people who might have a story similar to yours. How did they become single? What can you learn from them? I’d love for you to check out the book. It’s on my website at askjackie.ca.

Tom: Great. Thanks for being on the show.

Jackie: This has been great. I really appreciate it. Thank you so much, Tom.

Thank you, Jackie, for your insight into managing money as a single person and for the helpful tips to help make things easier. You can find the show notes for this episode at maplemoney.com/115. The Canadian Financial Summit is happening in mid-October. This is a virtual summit and features many of Canada’s top experts in the personal finance and investment communities, including yours truly. Close to the date I’ll be giving away free tickets for the entire summit. Be sure to get your free tickets. Sign up to my newsletter at maplemoney.com/newsletter and wait for the email next month. As always, thanks for listening. I look forward to seeing you back here next week. See you soon.

The stats show it’s definitely more expensive to be on your own. When you’re a couple, you’re sharing a lot of costs. It doesn’t cost double if you’re renting an apartment...if you’re sharing 2 incomes, that gives you way more opportunity to save. - Jackie PorterClick to Tweet

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