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Important points:
- In 2023, approximately 51% of Americans were unmarried.
- Single Americans who live alone face higher housing costs, more difficult meal planning, less emergency assistance, and potential tax penalties.
- Living with a roommate can help reduce housing costs.
- Preparing bulk meals can help reduce food waste.
- A well-stocked emergency fund is a must.
Over the past 70 years or so, the number of Americans living unmarried has increased. According to the U.S. Census Bureau, 51% of Americans 15 and older will be unmarried in 2023, compared to 35% in 1950.
While single life has many benefits, including more freedom and simpler budgeting, it can also bring some drawbacks. Here, common financial challenges single Americans face and experts suggest ways to overcome them.
housing
One of the biggest costs you’ll face as a single person is housing costs.
“Living alone comes with a huge financial burden, as you have to pay rent and mortgage payments, as well as cover all the bills, maintenance and repairs,” money-saving expert Andrea Wollock said in an email. said.
“Finding a roommate to share these costs is a great way to improve your financial health, especially for singles who own their own home. It’s like having someone else pay your mortgage. ”Wollock said.
But who should I live with? According to the Federal Reserve, 86% of Americans report living with a spouse, partner, child, parent, sibling, other relative, or nonrelative. The remaining 14% live alone.
meal
Shopping for groceries, planning meals, and ordering takeout can also be difficult for single people.
“One of the biggest complaints I hear from single people who live alone is that it’s hard to cook for one person,” says Wolloch.
She suggested choosing a day each week to bulk-cook several meals and freeze one serving. It’s easy to reheat when you’re hungry and you don’t have to worry about overeating, throwing out the trash, or having leftovers spoil.
Woroch recommended splitting bulk purchases with others, as buying items in small quantities can be expensive.
“Find a friend, family member, or neighbor to split your bulk purchase with. That way, you can benefit from a lower price per unit without burdening yourself with an oversized package,” she says. said.
Additionally, food delivery can be more expensive than single-person delivery due to minimum order requirements. You can save money by ordering when friends and family are coming over, or by ordering only the bare minimum of the item you want.
health and economic emergencies
“If you’re married and you get sick or lose your job, your partner may be able to make up the difference in income,” Molly Ward, a certified financial planner at Equitable Advisors, said in an email. .
If you’re single, you can’t afford to rely on your partner’s income, so you need to have an adequate emergency fund. Financial experts generally recommend having three to six months’ worth of living expenses on hand. As a single person, it is a good idea to save for about six months.
To be prepared for whatever the future may bring, Ward suggested taking an annual inventory of your finances and figuring out what you need to manage your finances at a minimum level.
Once you’ve done that, she recommended asking yourself difficult “what if” questions, such as:
- What if I can’t work? How long will my savings last?
- Is my emergency fund sufficient and do I have adequate disability insurance?
- What would you do if you suddenly died? Will my children and debts be covered?
- What if you can no longer take care of yourself when you get older? Are my will and medical directives up to date?
Doing this financial fire drill once a year will ensure you’re prepared.
tax
Being single also affects your taxes, but it may not be as bad as you think.
“When you get married, you may end up paying higher taxes than if you were single, known as the marriage tax penalty. This typically occurs when a married couple is taxed at a higher rate if they file jointly than if they file separately. Charlie Massimo, senior vice president and financial advisor at Wealth Enhancement Group on Long Island, said in an email.
“The reason for this penalty is that state and federal taxes are not always doubled at the single income tax rate for married couples filing jointly, especially from middle-income earners who earn similar amounts of money. We see this trend among higher income earners,” he said.
Couples filing jointly can earn exactly twice as much as a single person before moving up to the next tax bracket. A potential benefit is the flexibility of one spouse being able to earn more than the single income limit and one spouse earning less but still benefiting from the higher combined limit. It is located in
Conversely, some tax laws are less beneficial to married couples. For example, the capital loss deduction is limited to $3,000 whether you are single or married filing jointly. So while being single may have some disadvantages, there are also potential advantages.
Prepare for independent financial success
Financial success as a single person may take a little more effort, but it can be achieved.
In addition to the tips above, Ward suggested taking time to think about your future. “Where do you want to be financially in three years, in 10 years, and when you’re 85? This will help you make wise decisions today,” she says. said.
She also recommended educating yourself and reaching out to a financial professional if you need help. “Find someone you trust and are easy to work with. You can do a background check here,” Ward says.
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