Single women, especially those with children, need to take a strategic approach to finances, ensuring they have a plan for spending and saving.Getty Images
For many single women, especially those with children, the idea of saving money is laughable. Soaring rent costs, unprecedented food prices, and the cost of supporting kids typically takes precedence over paying down debt or saving for retirement – and resources on how to maximize income in these situations are slim.
“We’re treading water, and we try to live simply as possible,” says Jennifer Robinson*, a 52-year-old single mother of three who lives in Etobicoke, Ont. “I’ve gotten rid of my car to save money. We buy as much as we can on sale. The only plan we have is not to live beyond our means.”
As sole earners, single women are required to approach financial management strategically at each phase of life to get ahead. Yet, according to a Bank of Montreal 2023 report, 73 per cent of women surveyed said they didn’t have any written financial plan. Women with an evolving strategy for financial management, including advisory support from trusted sources, often find themselves ahead of the curve when it comes to building wealth.
“Whether by decision, design or default, if women are single they’ve got to take financial planning much more seriously because there isn’t anyone else to lean on,” says certified financial planner Léony deGraaf Hastings.
“Single parents have no time. The easier and more streamlined we can make financial management, the more likely she is to stick to the plan,” Ms. deGraaf Hastings adds. One strategy for this is automation.
“They can automate their savings with bi-weekly or monthly deposits to RRSP, TFSA, and RESP accounts instead of having to make decisions about what to do with the money in real time.”
Certified financial planner Léony deGraaf Hastings says single women need to take financial planning seriously because they have no one else to lean on.Supplied
With a plan in place, another strategy for building wealth is understanding how to maximize earnings, even marginally, so that no cash a woman may be entitled to is left on the table. Ms. deGraaf Hastings says a lack of education about what resources may be available is a stumbling block for many of her clients.
“A lot of times pension plans are ignored, or people aren’t clear on their options, so they just leave the defaults in place,” she says. “Or, people may not be taking advantage of employer matching programs, so they don’t know that if they would contribute more [to their pension], their employer may match their contribution, which could double their returns.”
Ms. Robinson worked at a university for 16 years before declining health caused her to take a leave of absence. From there, bills piled up as her health challenges worsened.
Looking back on that time, Ms. Robinson says she was earning enough for her family, but now she realizes that she didn’t have the information she needed to prepare for a major life event like the onset of a serious illness.
“I had three young kids, and I was a full-time prof, so you’re scrambling and it’s hard to get a signal through that noise. In some ways it boils down to marketing. I know that [informational] programs exist, but they don’t hit your radar.”
Francesca Tarantino, a private investment portfolio manager with Scotia Wealth Management, says financial plans should be revisited near any major life event to ensure there’s a comprehensive strategy to handle any financial shifts.
“Stages of life are a big deal,” says Ms. Tarantino. “In your prime earning years, women are trying to make sure that they are claiming all tax deductions like childcare and medical expenses, claiming children as eligible dependents, and transferring tuition tax credits over so they can claim them.”
“Mid-life, divorce is often a destroyer of wealth,” Ms. Tarantino continues. “It can also be the first time that [a woman] has to focus on finances. This can be overwhelming, and they suddenly have to figure things out on their own.”
Mid-life, as many women also endure the passing of elderly parents, any inheritance could be deposited in an account that is not shared. That way the funds are not subject to division in the event of a marriage dissolution.
Ms. Tarantino advises clients to update their financial plan every three to five years to ensure it still reflects their current reality. In addition to leaning on financial professionals, she says many of her women clients find it beneficial to lean on one another.
“Empowering women to learn from other women through things like support and mentorship creates that strong connection and community.”
Ms. Robinson says that when she does drum up the courage to ask for guidance on her financial situation, she calls her sister. Increasingly, according to Ms. deGraaf Hastings, the elderly women she advises are leaning on other women to keep themselves financially afloat as well.
“To reduce living expenses, I’m finding older retired women are looking for similarly positioned women to live with. There’s a group called Senior Women Living Together that’s like matchmaking for single senior women who are like-minded women and might want to share space to reduce their costs.”
If there is cash left in the end to invest, both advisors suggest that women avoid putting all their money in slow-growing investments.
“Single women should be aware that the risk of running out of money in retirement is real if their investments won’t keep ahead of inflation,” says Ms. deGraaf Hastings.
“They’re risk averse because it’s all on them to save, so they may default to bonds and GICs or high-interest savings accounts, but that’s best for the short term.”
“A lot of women tend to be too conservative,” agrees Ms. Tarantino. “Clients tend to want to be secure and invest in GICs, where they’ll pay interest income that is taxed much higher compared to something like dividend income or capital gains. You have to look at how much you’re keeping after tax.”
“Get yourself an advisor,” Ms. Tarantino continues. “One that you connect with. You have to feel comfortable enough to tell them what’s keeping you up at night, and they should be able to listen and give you advice.”
*Some details may be changed to protect the privacy of the persons profiled.