The Power Of One

Building a sound fiscal foundation while you are living single

When Charles Shannon decided 11 years ago to bid farewell to the corporate arena at the age of 35, he departed with a sizable nest egg–roughly $250,000 in pension funds and employee stock options. As a result of the divestiture of Ma Bell in 1984, Shannon had received shares in several telecommunication companies, including Ameritech, AT&T, Southern Bell, and Southwestern Bell. The former facilities engineer had devoted 12 years to the phone company in his native Detroit and had been investing since he entered the workforce in his early 20s. Shannon says he went solo in 1990 because downsizing was coming into play, which to him meant reduced promotional opportunities. “I thought I could apply my skills elsewhere, as opposed to staying put and [hitting the glass] ceiling,” he says. That same year, he launched Diverse Enterprises, a business-services distribution company in Detroit.

Fortunately for Shannon, he isn’t like most people living the “single life.” Many singles play the dating and waiting game. They wait to buy their dream home as they search for the perfect mate; they wait to start an investment plan hoping to earn the ideal salary; or they wait until a tragedy strikes, such as a disabling injury or job layoff, before they plan for the unexpected.

Shannon hired a financial advisor to help him develop a plan, which included rolling over his money into a self-directed IRA and coming up with the appropriate asset allocation mix comprised of real estate, stocks, bonds, and mutual funds. Shannon has since watched his $250,000 portfolio more than double over the past 10 years. While he is still in search of Miss Right, that hasn’t kept him from hashing out the affairs of his estate–drawing up a will, buying life insurance, and setting up a living trust.

You don’t have to be married with 2.5 kids and a pet to craft a lifelong financial plan. Everyone needs to address financial issues such as debt management, tax reduction, retirement savings, and estate planning. Better to deal with whatever money problems and poor financial management habits you have while you’re single instead of waiting until after you’ve said, “I do.”

PAY YOURSELF FIRST
There is a basic money principle that applies to everyone regardless of his or her marital status or financial situation. That is, “Pay yourself first,” which means set aside money from every paycheck for savings and investing, even if it’s only $50. Singles may have just as many financial responsibilities as married couples (e.g., rent or mortgage, car note, household bills), but they have only one income to cover those expenses, says Linda A. Barlow, a certified financial planner in Santa Anna, California. Barlow contends that singles “have a steeper hill to climb,” because, “When you are single, you have to think differently about your financial future, because you have only one salary, one pension, and one Social Security check to depend on.”

Shannon says his parents always taught him to save for a rainy day, which is why he puts his discretionary

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