How to save money when singles are on a tight budget

No matter how you look at it, being single in America is expensive these days. From facing fewer tax benefits to not being able to share everyday costs like rent or groceries, living alone can be much more expensive than living with a partner.

That said, more and more Americans continue to choose a single lifestyle. According to the U.S. Census, by early 2021, 37 million adults age 18 or older will live alone, up from 33 million in 2011.

At the same time, stagnant wages and record inflation mean that being single is now more expensive than ever — and in the U.S., these trends have also contributed to the widening gap between the rich and the poor between married and unmarried people .

So why is this so? Select takes a closer look at how the so-called “single tax” works and what single Americans can do to combat rising costs.

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Manage your finances as an individual

One thing to note before we start: For the purposes of this article, we define a single person as someone who lives alone and doesn’t share any expenses with a romantic partner or roommate, while the “single tax” is compared to a partner or married person , singles face a higher cost of living.

With that in mind, consider the following analogy: Imagine you’re trying to put out a fire on your own. If you want to control it, having another firefighter by your side will definitely give you a better chance of putting out the flames.

The same idea applies to paying for everyday expenses. Whether you’re dealing with larger monthly payments (like rent or mortgage) or smaller bills (like gas or groceries), having two incomes for a household, or splitting expenses with someone, it can provide huge help.

Of course, inflation didn’t play a role, and according to The Wall Street Journal, inflation has been a major factor in the widening wealth gap between singles and married people. Single Americans also lag behind in every aspect of personal finance, including spending and saving habits, income levels, taxes and net worth. Below is the case for each category.

spending and saving habits

The gap between married and single people starts with how much people spend — and how much they save — each month. According to a recent study by personal finance firm SoFi, the gap between the two groups is stark.

Average monthly spend

  • Married or living with partner: $1,000
  • Single, Widowed or Divorced: $800

According to the data, two people living together end up spending an average of $500 a month, but when you don’t have someone to split the cost, that number soars by 60%.

median monthly savings

  • Married or living with a partner: $300
  • Single, Widowed or Divorced: $100

The study also showed that people who lived with a partner were able to save three times as much as those who were single.

While it may be easier to spend less and save more as a couple, singles can still take steps to cut back and save more. To help track your own spending habits and save on monthly expenses, consider using a budgeting app like Mint or YNAB (You Need a Budget).

Mint

Information about Mint has been independently collected by Select and has not been reviewed or provided by Mint prior to publication.

  • cost

  • Salient features

    Display income, expenses, savings goals, credit score, investments, net worth

  • Classify your expenses

    Yes, but user can modify

  • account link

    Yes, bank and credit cards

  • Availability

    Available in the App Store (for iOS) and Google Play (for Android)

  • security function

    Verisign Scanning, Multi-Factor Authentication and Touch ID Mobile Access

You need a budget (YNAB)

Information on You Need a Budget (YNAB) has been independently collected by CNBC and has not been reviewed or provided by YNAB prior to publication.

  • cost

    34-day free trial, then $84 per year or $11.99 per month (12-month free trial for students with proof of enrollment)

  • Salient features

    Instead of using traditional budget buckets, users allocate every dollar they earn to something (called a “zero-based budgeting system,” where not a single dollar goes unaccounted for). Every dollar is assigned a “job,” whether it’s paying bills, saving, investing, etc.

  • Classify your expenses

  • account link

    Yes, bank and credit cards

  • Availability

    Available in the App Store (for iOS) and Google Play (for Android)

  • security function

    Encrypted data, certified data centers, third-party audits, etc.

Differences in income levels

According to a 2021 Pew Research Center report, in 2019, the median income for single men was $35,600, compared with $57,000 for men with a partner. Women’s median earnings followed the same trend, with single women earning $32,000 and their partners earning $40,000.

Why is there such a big difference? A 2021 study in the American Journal of Economics argues that the marital wage premium — the concept that married people make more money — comes from two core principles:

  • Income concentration, or two incomes per household. This makes individuals more selective when choosing a job, as they can rely on their partner’s income when looking for the highest paying job.
  • Climb the job ladder faster, as married people tend to advance their careers faster than single people.

Higher incomes come with higher tax liabilities — although married couples often get significant tax deductions and benefits to help deal with the situation.

in terms of tax

The U.S. tax system is progressive, so the more money you make, the more tax you pay. As a result, single tax filers end up facing a higher tax burden than married couples.

For example, a single person and a married couple each earn $225,000. Singles will hit a higher marginal income tax rate of 35%, while married couples will hit just over 24%. In this case, single individuals will have to pay at least $12,000 more in tax than married couples, excluding any other adjustments or deductions.

Charles D. Lindsey, Associate Professor of Marketing, University at Buffalo School of Management, It is said that this is a direct reflection of the economic system, institutions and tax laws not keeping up with modern times. It is affecting the long-term wealth that singles can accumulate.

Overall net worth

In 2019, the median net worth of married couples ages 25 to 34 was nearly nine times that of single-person households, according to data provided to Select by the Federal Reserve Bank of St. Louis. By comparison, the median net worth of married households in 2010 was only four times higher.

One reason married couples are so far ahead is the benefits of homeownership, which has historically been a key component of American wealth growth. In 2022, 60% of homebuyers will be married couples (another 9% will be unmarried), while only 18% of homebuyers will be Made by singles.

The Consumer Finance Survey, released in September 2020, also showed that in 2019, the median net worth of homeowners (most of whom were married or in partnership) was $255,000, while renters had a net worth of just $6,300. That’s a huge difference between the two groups, with homeowners more than 40 times wealthier, and that gap has likely widened since then.

Homeowners can increase their net worth by owning property regardless of marital status, but as most homeowners tend to be married or partnered, singles are once again being left behind, this time by not making the potentially large sums Buy. increase their net worth.

Ideas to Help You Make Money While Single

The financial pressures of being single are greater than ever, so much so that Lindsay advises those living alone to “think outside the box and look at some tips,” such as living with family members or roommates to help save money. In the meantime, here are some other ideas to help singles save.

Create a budget and plan

Lindsey told Select that having a budget is crucial during times of financial stress, as having a plan in place to deal with increased financial stress. This can include setting up a high-yield savings account, such as the American Express® High-Yield Savings Account, to earn a higher savings rate or using a Roth IRA to save for retirement.

American Express® High Yield Savings Account

American Express National Bank is a member of the FDIC.

  • Annual Yield (APY)

  • Minimum balance

    Minimum account balance is $0

  • monthly fee

  • maximum transaction volume

    Up to 9 free withdrawals or transfers per statement cycle *Withdrawal limit of 6 pcs/statement cycle waived under Regulation D during the coronavirus outbreak

  • Transaction fees are too high

  • Overdraft Fee

  • Offer a checking account?

  • Provide an ATM card?

American Express National Bank is a member of the FDIC.

Fidelity Investments

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. There are no minimum requirements to open a Fidelity Go account, but the robo-advisor needs a minimum balance of $10 to start investing. Minimum balance for Fidelity Personalized Planning & Advice is $25,000

  • cost

    Fees may vary depending on the investment vehicle selected. Zero commissions on stocks, ETFs, options trades and some mutual funds; zero transaction fees on over 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free on balances under $10,000 (after that, $3 per month for balances between $10,000 and $49,999; 0.35% on balances over $50,000). Fidelity Personalized Planning & Advice charges 0.50% consultation fee

  • bonus

  • investment vehicle

    Robo-advisors: Fidelity Go® and Fidelity® Personalized planning and advice Irish Republican Army: Fidelity Invests in Traditional, Roth and Flip IRAs Brokerage and Trading: Fidelity Investments Trading other: Fidelity Investments 529 College Savings; Fidelity High Speed ​​Rail®

  • investment options

    Stocks, Bonds, ETFs, Mutual Funds, CDs, Options and Fractions

  • Educational Resources

    Extensive tools and industry-leading in-depth research from over 20 independent providers

The sooner you start saving and investing, the more time you have to grow your money through compounding.

start a side business

A side hustle is considered anything that helps you earn extra income outside of your regular job, such as babysitting or bartending gigs or doing freelance projects before or after your 9-to-5.

find a new job

It is well documented that changing jobs can lead to significant pay raises. If you haven’t gotten a raise or promotion in a while, you may benefit from asking for one or even switching companies.

bottom line

Life is expensive, and when it comes to paying all the bills alone, doing it all on your own will definitely add even more stress. But with the right planning and enough persistence, you can improve your environment without sacrificing independence.

Editor’s Note: The opinions, analyses, comments or recommendations expressed in this article are those of select editorial staff only and have not been reviewed, approved or otherwise endorsed by any third party.

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