Fears of an upcoming recession and high inflation may be weighing most heavily on single women, according to a financial advisor who works with that demographic.
“In times of inflation, the cost of everything goes up, including rent, utility bills, groceries and health care,” said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California. For women living alone, Curtis said, “they take on the brunt of increased expenses.”
Making matters worse is the persistence of the gender wage gap, with women still earning just 82% of what men make, said Curtis, a member of the CNBC Financial Advisor Council. “Rising inflation hits women harder with their smaller incomes,” she said.
If there is a recession later this year, as some economists predict there will be, many single women would enter it in a more financially vulnerable situation, Curtis said. But she has tips on how they can protect themselves.
Build up an emergency fund
Recessions can lead to trouble for the labor market, with deep job cuts. For women who live alone, losing a paycheck can mean a pause in all income for the household, and lower wages relative to men may mean single women also have less savings to turn to.
As difficult as it can be to think about losing your job, knowing that you’d be OK, financially, during a period of unemployment may provide some security, Curtis said.
“Being out of work for weeks or months when a recession hits is a real possibility,” Curtis said. “This can be challenging for a single woman who already had a lower comparative salary than her male counterparts.”
Her main advice to single female clients is to build up an adequate emergency fund. She recommends they have at least six months of their basic living expenses salted away, “but if the person feels their company or industry is unstable, I recommend a year’s worth of basic expenses.”
Amid rising interest rates, people can earn 4% or more on their cash, too, if they do a little legwork to find such an account.
Look for ways to cut back on expenses
Women worried about an economic downturn may want to cut back on their discretionary spending as much as possible, Curtis said. Focus on saving and investing instead.
Subscriptions, cable, insurance and food are usually areas where some cutting is possible, she added. As the labor market flashes some warning signs, some women may want to pick up a side hustle if they have a skill they suspect could generate money.
If your job is fully remote, Curtis added, moving to a lower-cost area may be another good option.
Prepare for the possibility of a layoff
Curtis also advises women to keep their resumes up to date with all their experience and accomplishments, and to continue to grow their network “even when times seem good.”
“The more contacts a person has, the more likely they will find a new job quickly,” she said.
You also want to keep your skills “fresh,” she said: “Take classes, watch webinars, read — always be up to date in your field of work.”