Staring Down the Singles' Penalty
Common sense tells you that people who live alone use a greater percentage of their income on regular living expenses compared to couples.
When you dissect the average person's monthly budget, the basics include rent or mortgage, utilities, cable and Internet, cellphone, groceries, entertainment, transportation expenses, and loan payments, says Mitchell Weiss, adjunct professor of finance at the University of Hartford. "When two people come together, many of these monthly expenses would be fully or partially consolidated," Weiss says.
Some singles view their increased costs as a penalty for living alone. For instance, at the grocery store, "single servings" of meat and other items cost more per ounce than the family-size varieties.
"There's really no avoiding the singles' penalty," says Deana Arnett, senior planning consultant at Financial Planning Services in northern Virginia. "That's why budgeting, in a lot of ways, is even more critical for single people. It really depends on how extreme you're willing to be with budgeting and lifestyle items. It is really a matter of prioritizing and deciding how much you are willing to sacrifice."
Once you decide where you can cut corners, living alone doesn't have to be a burden. Here are some solutions for saving money in your budget.
Save on Singles' Housing Costs
As a percentage of their income, "single people pay much more for their basic living expenses than couples," says Matt Kelly, owner of Momentum Personal Finance Coaching in Durango, Colo. "The biggest difference, by far, is housing."
Weiss recommends spending no more than 25% of your annual pretax income on housing costs, which may require some planning. Getting a roommate or housemate is "a classic way to reduce living expenses by simulating a two-income household," Kelly says. A two-bedroom apartment may cost more than a one-bedroom, but it won't cost twice as much, and the utilities won't be doubled.
Kelly also recommends the following ideas to cut housing costs.
- Find a unique efficiency apartment or guest house that is part of someone else's home.
- Buy a yurt, recreational vehicle or camper, and rent space on someone else's land.
- Become a caretaker of a property or house sitter.
- Combine your work and living space, particularly if you are self-employed.
Consider experimenting with small or unique living situations to save money. "Start with a budget, and be realistic about what you can afford," says Deana Arnett, senior planning consultant at Financial Planning Services in northern Virginia. "If what you can afford is less than you want, relax. It doesn't have to be this way forever."
How Singles Can Save on Food Costs
Every time you order lunch in or go out to dinner, you're eating into your food budget. One effective way to cut your food costs is to cook your own meals rather than eating out.
Clarissa Hobson, a CFP with Carnick & Co. in Colorado Springs, Colo., recommends organizing single friends twice a month to host a frozen-food exchange. "Everyone makes one large recipe and then divvies it up into single-serving portions," she says. "This way, you can still buy in bulk for your recipe, but you end up with a variety of dinners."
Another option is to start a personal chef club at work. "Get three to five other single people who will agree to each make a meal one day per week," says Matt Kelly, owner of Momentum Personal Finance Coaching in Durango, Colo. "On the days that it's your turn to cook, you prepare the meal and deliver individually packaged portions to your club members."
Kelly also recommends these additional ways to cut costs on food.
- Cook from scratch rather than buying prepared foods.
- Buy only what you need at the grocery store for preplanned meals.
- Eat less meat and cheese.
- Don't buy single-serving packages of food.
- Go out for dinner only as a planned treat.
Singles: Save on Household Products
Just as you can cook in bulk and share food with friends, you can pool your money to make bulk purchases, says Clarissa Hobson, a CFP with Carnick & Co. in Colorado Springs, Colo. If you don't have room to store 25 rolls of paper towels, you can still take advantage of the bulk prices at Sam's Club or Costco when you shop with others for household products.
"This works best if you live near those participating. For example, a bunch of people in the same apartment building," Hobson says. "Basically, you pool funds for these specific items, buy them in bulk and then divide them up."
And don't forget to take advantage of the savings offered by coupons. "You don't have to be an extreme couponer to benefit," Hobson says. "Only buy the things you need."
While you still can clip coupons from the Sunday newspaper, there are numerous other ways to find coupons. Log on to your grocery store's website and download electronic coupons to your "preferred customer" card before you shop, and the savings will show up when you purchase those items. If you prefer to shop certain brands, check those manufacturers' websites for current coupons. In some cases, you can sign up to receive coupons via email or text.
Cut Transportation Costs as Single Person
If you own a car, then gas, car insurance and maintenance costs can become a hefty budget item. To save money on gas, consider carpooling to work or using public transportation, says Clarissa Hobson, a CFP with Carnick & Co. in Colorado Springs, Colo. You can also cut transportation-related expenses by raising your insurance deductible or switching to liability-only car insurance, says Matt Kelly, owner of Momentum Personal Finance Coaching in Durango, Colo.
If you're still making car payments, consider trading it for an older model that you can pay for in cash. You also can ride your bike or walk if you're close enough to your destination. That's a good option for your budget, health and the environment.