Banking

Single people’s budgets are stretched more than ever thanks to the singles tax — here’s how to save more money – News Opener

No matter how you look at it, being single right now in the U.S. is expensive. From facing fewer tax advantages to not being able to split everyday costs like rent or groceries, living solo can come at a much higher price than with a partner.

That said, more and more Americans are continuing to opt for a single lifestyle. According to the U.S. Census, 37 million adults at or above the age of 18 lived alone in early 2021, up from the 33 million who did so in 2011.

At the same time, stagnant wages and record-high inflation rates mean being single is now more expensive than ever — and in the U.S., those trends are also leading to a widening wealth gap between those who are married and those who are not.

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

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Managing finances as a single individual

Spending and saving habits

The gap between married and single people starts when you look at how much money people are spending — and how much they’re putting into savings — each month. According to a recent study by the personal finance company SoFi, the gap is stark between the two groups.

Median spending amount per month

  • Married or living with a partner: $1,000
  • Single, widowed, or divorced: $800

According to these figures, two people living together would end up spending an average of $500 per month each, but when you don’t have anyone to split costs with, that number skyrockets by 60%.

Median saving amount per month

  • Married or living with a partner: $300
  • Single, widowed, or divorced: $100

The study also showed that those 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, single people can still take steps to cut their expenses and put away more money. To help track your own spending habits and save on monthly expenses, consider using a budgeting app such as Mint or YNAB (You Need A Budget).

Mint

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

  • Cost

  • Standout features

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

  • Categorizes your expenses

    Yes, but users can modify

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

  • Security features

    Verisign scanning, multi-factor authentication and Touch ID mobile access

You Need a Budget (YNAB)

Information about You Need a Budget (YNAB) has been collected independently 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 (students who provide proof of enrollment get 12 months free)

  • Standout features

    Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the “zero-based budgeting system” where no dollar is unaccounted for). Every dollar is assigned a “job,” whether it’s to go toward bills, savings, investments, etc.

  • Categorizes your expenses

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

  • Security features

    Encrypted data, accredited data centers, third-party audits and more

A difference in income levels

According to a 2021 report by the Pew Research Center, in 2019, single men earned a median amount of $35,600, while partnered men earned $57,000. Women’s median earnings showed the same trend, with single women bringing in $32,000 and their partnered counterparts earning $40,000.

Why is there such a big difference? A 2021 American Economic Journal study theorizes that the marital wage premium — the notion that married people make more money — comes from two core principles:

  • Income pooling, or having two incomes per household. This allows individuals to be more particular with their job selection since they can rely on their partner’s income while the search for the highest paying job.
  • Climbing the job ladder faster, as married individuals tend to advance their careers faster than those who are single.

And with higher income comes a higher tax responsibility — though married couples typically receive significant tax breaks and benefits to help counter it.

In terms of taxes

Overall net worth

According to data provided to Select by the Federal Reserve Bank of St. Louis, in 2019, the median net worth of married couples between the ages of 25 and 34 years old was nearly nine times higher than that of single households. In 2010, by comparison, married households’ median net worth was just four times higher.

One reason why married couples came out so far ahead is due to the benefits of homeownership, which historically has been a key component of growing wealth in the United States. According to the Home Buyers and Sellers Generational Trends Report by the National Association of Realtors Research Group, in 2022, 60% of home purchases were made by married couples (another 9% were made by unmarried couples), while only 18% of home purchases were made by single people.

The Survey of Consumer Finances, released in Sept. 2020, also showed that in 2019, the median net worth of homeowners — the majority of which are married or partnered — was $255,000, while renters had a net worth of just $6,300. That’s a big difference between the two groups, with homeowners being over 40 times as wealthy, and it’s likely the spread has widened since then.

Regardless of marital status, homeowners can reap the benefits of growing their net worth by owning property, but since the majority of homeowners tend to be married or partnered, single people are left behind once again, this time for not making a major purchase that could advance their net worth.

Creative ideas to help you make money while single

American Express® High Yield Savings Account

American Express National Bank is a Member FDIC.

  • Annual Percentage Yield (APY)

  • Minimum balance

    Minimum balance to open is $0

  • Monthly fee

  • Maximum transactions

    Up to 9 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee

  • Overdraft fees

  • Offer checking account?

  • Offer ATM card?

American Express National Bank is a Member FDIC.

Fidelity Investments

  • Minimum deposit and balance

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

  • Fees

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

  • Bonus

  • Investment vehicles

    Robo-advisor: Fidelity Go® and Fidelity® Personalized Planning & Advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®

  • Investment options

    Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares

  • Educational resources

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

The earlier you start to save and invest, the more time you’ll have for compound interest to grow your money.

Start a side hustle

Having a side hustle is considered to be anything that helps you bring in extra money that occurs outside 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’s well documented that switching jobs can lead to a significant pay increase. If you haven’t been given a raise or promotion in a while, you may benefit from asking for one or even switching companies.

Bottom line

Life is expensive, and doing it all on your own can definitely add more pressure when it comes to covering all your bills solo. But with the right plan and enough persistence, you can improve your circumstances without having to sacrifice your independence.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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