Financial planning for the first time? A guide for women on a single income

Wealthsimple, a Canadian online investment service, conducted a survey in November 2023 and learned why—it found that a staggering 72% of women feel they simply don’t know enough about investing and don’t feel confident enough to try—so they don’t. And only one in four Canadian women seek out advice from a planner, according to a TD Waterhouse poll. 

That’s the bad news. The good news is, “it’s never too late to start investing,” says Teresa Black Hughes, a financial advisor at RGF Integrated Wealth Management in Vancouver. More good news: Women are better savers than men, according to a 2017 Fidelity survey, which means we’re more than capable of saving for our future—we just need a financial plan in place.

Here’s how three financial experts help their single-income female clients plan for the future so you can do the same.

How to get started with financial planning

This is often the part that’s a deterrent for some people: The part when you must come face-to-face with your finances. But it doesn’t have to be so daunting—just follow these steps:

Make a realistic financial plan

As a planner, Hughes has helped a range of single-income women in Canada, from teachers and housekeepers to actors and lawyers, achieve their savings goals, who she says all had one trait in common: “They were all disciplined.” Hughes sits with her clients to find out where they are financially and makes a plan to get them to where they want to be. “By showing them the numbers, we can determine how far away they are from [their savings goals] and if there’s anything we can cut out,” she says.

Here’s what you can do on your own: Start by determining your financial goals. Identify what you want to do with your money, whether it’s a short-term goal like saving for a car or a long-term goal like retirement. And decide how long you have to save. 

Next, assess your current financial situation. Look at your income, expenses, debts and assets for a clear picture of where you stand. Then, determine how much you need to save each week or month to achieve your goals within your timeline. Finally, create a budget and if necessary, find alternative ways to bring in more income to meet your savings goals. (Here’s a free downloadable budget Excel template to get you started.) 

But wait—this doesn’t mean you need to make drastic changes that could lead to an uncomfortable or unenjoyable life. “Give yourself a little bit of grace,” says Jennah Cornelissen, lead advisor at Wealthsimple. “There’s no discount for being a single person,” she says. “Rent, groceries, [and so on] cost a significant amount of your take-home pay.” 

While some financial advisors recommend the 50-30-20 rule, where 50% of your pay goes to fixed expenses, 30% to discretionary and 20% to savings, putting aside just 10% of your take-home pay for savings is OK, too. “We can be as efficient with that 10% as we can possibly be… meaning we could put your savings in a diversified portfolio where the expected returns are going to be higher and over a longer period of time.”

Ayana Forward, a financial advisor and founder of Retirement in View in Ottawa, acknowledges how hard it can be for single women—and all women—to create a plan to invest, particularly early in their careers. “You have all kinds of competing priorities,” she says, including possible childcare expenses, a mortgage, car payments and school debts. However, Forward encourages women to begin saving anything they can as soon as possible to build habits and benefit from compound interest, which is when your money’s interest starts earning interest of its own. 

Here’s how that can look: Let’s say you take $100 a week from your miscellaneous allotment and invest it at an interest rate of 5% and watch it grow. After 30 years, if you had put that $100 in a savings account with no or a low interest rate, you’d only have $156,100—but because you invested it, you’d have $345,914. (Calculate your savings with our compound interest calculator.) 

Prioritize what you love

What are your absolute must-haves in life? Your non-negotiables? You don’t have to give those up—you may just have to find an alternative way to make them work while meeting your savings goals. “My client, who is a college instructor, loves to travel, and her trips are usually tax deductible,” says Hughes. But to be able to afford her trips while continuing to save, she picked up a part-time job. “It gave her some extra income since she was determined to meet her goal, which was to own a place of her own,” says Hughes. 

Whether you pick up a side hustle or not, chances are there will still be a few sacrifices you’ll need to make. It comes down to looking at your budget and deciding what you want to prioritize in the immediate time period, says Cornelissen, and deciding what you can let go of for a while. 

Or it can relieve you from doing the opposite, over-saving for fear of not having enough money. Knowing how much money is going in and going out of your account is key to making a plan for your money.

Revisit your employee contract

If you’re employed full-time, find out if your company offers a pension or an employer-sponsored plan, such as RRSP matching (where an employer contributes the same amount as an employee to a registered retirement savings plan). This will help you determine how much you need to save for retirement. “If you don’t have a pension, you’ll need to save more than someone who has a pension,” says Forward. 

Also, when planning for your retirement explore government income sources that may be available, like the Canada Pension Plan (CPP) and Old Age Security (OAS). “You can go into your My Service Canada account to get those benefit statements so you know what you’ll be receiving from those programs,” says Forward. (You can log into your My Service Canada account using a unique password or use your bank account log in.)

Hire an expert

What are things a planner will think about that you might not? Timing the market for certain securities, your risk tolerance and inflation and the value of your savings To ensure you’re on the right track to meet your goals, consider hiring a financial planner. They can provide general guidance to help you organize your income and advise on risk-oriented investments.

“Advisors can tell you what an appropriate risk level in terms of your breakdown between stocks and bonds would look like given all the information you tell us, such as your age and how tolerant you are for seeing volatility in your portfolio,” says Cornelissen.

Alternatively, you can have a financial advisor recommend specific stocks to buy to help you meet your goals. Some planners are specialized for client situations, like divorce, single-parent and even women. So ask your potential planner about their experience for areas that are important to you.

How to save money as a single woman

According to the HOOPP 2024 Canadian Retirement Survey, almost half of women have less than $5,000 in their savings accounts—and a quarter of respondents say they plan not to retire since they need to support themselves financially.

That doesn’t have to be you. There are a few ways to organize your savings and a few ways to invest your money to help it grow. First, set up automatic contributions. If part of your income doesn’t land in your account, you won’t really miss it, says Cornelissen. That’s why automatic withdrawals can be an effective way to save. They allow for a certain amount of each paycheque to go directly into a savings account of your choice, without you having to click a finger. 

Next, check into your employer-sponsored plans. Does your company offer RRSP matching? Or any other employer-sponsored plans? You’re entitled to that money, says Cornelissen. “Go for those dollars first because you’re automatically getting a return on your investment—that’s difficult to find anywhere else in the markets.”

Even if you don’t have a lot to invest into your RRSP each year, do it anyway, says Hughes, because every little bit helps. Finally, revisit the investment accounts that could benefit you, depending on your age and goals. Remember, if you do have a defined benefit (DB) pension, that money counts toward your RRSP contributions. 

Speaking of which, you have other registered account options. The most popular are the tax-free savings account (TFSA) the first home savings account (FHSA).

“The TFSA should not be used as an in and out account, but should be used for the longer term,” says Hughes. “The FHSA is a blessing for those who make enough money to use that on top of their RRSP.”

Plus, with an FHSA, if you don’t buy a home, you can roll your savings into your RRSP. However, RRSPs are only worthwhile if you’re earning at least $50,000 since tax-deferral benefits for RRSPs aren’t as high if you’re in a lower-income tax bracket. If that’s you, a TFSA would be a better choice. But regardless of which account you use, you’ll see the benefits of regularly contributing to it. “Your money will compound over time,” says Forward. 

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Why women need a financial plan

To reach your financial goals, you’ll need to check in on them monthly or quarterly. “Use an app or Excel to track your net worth over time,” suggests Forward. “Doing this encourages you to want to do more fiscally responsible things.” It’s also a good idea to revisit your goals if something in your life has changed, such as getting a new job, having a cohabiting partner, or receiving an inheritance. Checking in on your financial portfolio and making tweaks as needed is the best way to continue to make the smartest financial decisions for your future.

Read more about women and money:

• 5 great personal finance books by women
• How financial and estate planning can reduce money stress for women
• Women and money: Taking control of your personal finances
• Untangled Money’s Kristine Beese on why financial plans aren’t gender-neutral

About Renée Reardin

As the former senior digital editor at Best Health magazine, Renée has over a decade of experience as a writer and editor. She freelances for Canadian publications, like Elle Canada, Forbes and The Globe & Mail.

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