Starting over: insurance needs and budgeting as a newly single person

(ARA) - If you are facing 2010 as a newly single person, you will likely need to make some major budget revisions. Although you may no longer have to consider another person in your financial decisions, you now need to save for emergencies and retirement on just one salary. If you have children, their care is at least partially your responsibility and that must be factored in, as well as saving for their college expenses.

Budgeting for the single life

Determine your income: The most shocking aspect of dealing with your new, single-person budget may be acknowledging the change in your household income. Chances are it will be significantly smaller than it was when you had two incomes. Be sure to include any support or alimony payments that you may be receiving in your income estimate.

Determine your necessary expenses: This is the time when you may need to really pare down your expenses. Some expenses are non-negotiable, like your rent or mortgage payment, food and electricity. Be sure to include any alimony or child support payments you must make as well. You can find some great worksheets to help you in the financial planning guide: Improving Your Finances and Credit.

Adjust your insurance coverages: If you are downsizing to a smaller home or apartment and have fewer possessions, you may be able to reduce your homeowner's or renter's insurance benefits and premiums. If no one is depending on your annual salary except you, then you may be able to reduce your life insurance death benefit and subsequent premiums as well. However, if you are now the primary breadwinner for your family, you may need to increase your life insurance coverage. The experts at SBLI of Massachusetts recommend you talk to an insurance professional and request a coverage review before making any changes to your life insurance coverage.

Time for savings: Saving money for emergencies and retirement is extremely important. If possible, you should at least put enough in your 401(k) to max out your employer's match. You can use an online calculator to find out how much you should ultimately be saving in order to save enough for your personal retirement goals. You should also be putting at least 10 percent of your annual income in an emergency savings account. To access great planning tools and guides on saving and investing for retirement, visit the SBLI Learning Center.

Debt repayment: Ultimately, you should try to pay more than the minimum payment on all your credit cards and loans if you ever want to actually get out of debt. Any extra funds that you have that exceed your necessary expenses and your savings should be spent on paying off debt.

Add your wants: Your lowest priority should be budgeting for your wants. Wants are things like cable, entertainment, clothes and other unnecessary but fun expenses. A little bit of "want" is necessary in every budget, but the reduced stress you get from paying off debt and saving for retirement will keep you much more fulfilled than cable and some shoes that will be out of style in a year.

SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts, which is no way affiliated with SBLI USA Mutual Life Insurance Company, Inc. NAIC #: 70435. SBLI products may not be available in all states.

Courtesy of ARAcontent