How Being Single Affects Your Financial Life
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If you’re single and financially independent, you’ve probably noticed that our financial system seems to be designed with married couples in mind.
In many ways, the world is built on the assumption that everyone will get married in their 20s and remain married for the rest of their lives, either with two incomes or with one income that’s high enough to support a family.
And almost inexplicably, there are tons of incentives given to people who get married and stay married that single people can’t reap.
In terms of economic policy, for example, married couples have certain tax advantages available to them that unwed people don’t, and those who tie the knot have the legal right to hop onto the health insurance plan of the partner with better benefits. After a death, surviving spouses are often entitled to part of their partner’s social security benefits, and life insurance benefits are typically better for married people, too.
But what about the people who aren’t married?
Marriage is becoming less and less popular among younger generations; according to Pew Research Center, only 44% of Millennials were married in 2019, compared to 53% of Gen Xers, 61% of Boomers and 81% of Silents when they were the same age.
And while the share of unwed adults cohabitating with their partners has risen significantly, a 2019 analysis from Pew found that 38% of U.S. adults were unpartnered altogether—meaning they were neither married nor living with a partner.
Yet it seems like single people—people who aren't married yet, people who don’t want to be married, people who are no longer married—are at a pretty steep disadvantage compared to their married and cohabitating peers.
All of this is to say that, as societal attitudes around marriage and relationships change over time, the old ways of “doing” personal finance practically shut single people out. For better or for worse, being single has a huge impact on your financial life—and that's often overlooked by financial and social institutions that haven’t caught up to the trends.
Well, single people, we see you! Since we’re in the business of creating financial solutions for people from all walks of life, just know—this one’s for you guys.
Budgeting as a single person
Single people have one major advantage over coupled people when it comes to budgeting: balancing a budget is way less complex when you only have to worry about your own income and expenses. Making financial decisions for yourself is a lot easier than having difficult conversations about every major purchase and future financial goals.
Still, single people have less of a cushion than couples with two incomes, so they need to be very intentional with their budgeting to stay prepared for emergencies like major medical issues or job loss.
With that in mind, what should single people prioritize when they budget?
- Saving money for emergencies
- Eliminating debt (especially any shared debt with past partners)
- Investing for retirement
Of course, since one of the benefits of being single is being able to spend your money the way you want to, it’s great to use your money for the fun stuff, too! Just keep in mind that as much as being single allows you a certain amount of freedom in your budget, it also opens the risk of not having a cushion in an emergency. So go ahead and buy that plane ticket today if you have the cash—but keep your future well-being in mind, too.
Financial stability as a single person
It’s common knowledge that the cost of living has risen significantly in the last few years, in many cases outpacing the average household’s income. So where does that leave single people?
A 2021 analysis from Pew showed that 37% of unpartnered people are financially vulnerable, as opposed to 26% of partnered people.
Inflation has played a major role in widening that gap. According to the St. Louis Fed, in 2019, the median net worth of married couples aged 25 to 34 was almost nine times the median net worth of single households of the same age. Compare that to 2010, when married couples netted only about four times more than single people.
So if it’s harder to remain financially stable as a single person, why do people choose to stay single instead of pursuing marriage?
Setting views on the social and emotional aspects of relationships aside, many single people feel a deep sense of satisfaction in knowing they've earned their own money, they pay their own bills and expenses, and they don’t have to depend on someone else. (Isn’t there a song about this?) Many find comfort in knowing they’re financially independent; it feels less risky than hedging their own well-being on someone else’s income, money management skills, and reliability.
Still, it’s undeniable that being single carries financial risks that married and partnered people don’t face to such an extreme degree. These risks are most transparent when it comes to housing, caring for children, and saving for retirement.
Housing and rent
It’s a well-established fact that home ownership is a distant dream for younger generations due to the rising cost of living—meaning many people are forced to rent instead.
But the cost of renting has become unaffordable in many parts of the U.S., too, with median rent nationwide jumping to over $2,000 for the first time in 2022. Meanwhile, the median annual household income of Americans is $70,784.
Of course, one common piece of advice spouted at renters is that they should follow the “30% Rule” of spending 30% of their gross income on rent. We’ll do the math for you on how that rule plays out in reality: the median cost of rent is at least a few hundred dollars higher than half of all American households can afford.
In fact, according to the U.S. Bureau of Labor Statistics (BLS), single people spend more than 37% of their income on housing alone. That's a whopping seven percentage points more than married couples with kids.
In a market that’s already hostile to renters, how do single people end up spending so much more of their income on housing than their married-with-children peers?
Interestingly enough, the cost difference between a one-bedroom and a two-bedroom apartment is surprisingly small in most cities—so people renting larger places tend to get more bang for their buck.
Plus, married people typically make a lot more than single people—up to 32.6% more. (Researchers believe that sharing finances with a partner impacts people’s decision-making process when looking for a new job, because they can depend on their partner’s income while job searching and exploring better opportunities. Single people may not be able to hold out as long to search for the highest-paying position possible.)
So, combining a difficult housing and rental market with lower overall household incomes, single people are at a definite disadvantage when it comes to finding affordable living spaces.
Single parenthood
Being single with kids is where things get more complicated—and single mothers in particular face a distinctly high level of financial challenges.
A 2019 study by the St. Louis Fed found that, while single women without children and single men (with or without children) have a median overall wealth sitting in the range of $57,000 to $65,000, single women with children have a shockingly low median of just $7,000 in wealth to their name. This leaves single mothers with less of a financial cushion in the face of an emergency, leading to a destabilizing ripple effect on their food security, housing security, ability to get childcare, and so on.
The pandemic played a major role in exposing the difficulties single moms face. While childcare got more expensive and unreliable and schools shifted to remote learning, many people (especially mothers) found themselves having to drop out of the workforce entirely to supervise their children. In November of 2020, one in five single mothers experiencing COVID-19-related disruptions to their normal childcare situation indicated that they weren’t working—more than double the unemployment rate of other parents.
There’s no way to put a positive spin on managing your personal finances as single parent; the typical person’s situation isn't great. Single parents—and single moms in particular—struggle significantly more than others when it comes to their finances, to the point where it’s become a crisis.
Saving for retirement
Given what we know about the wage gaps between single and married people, it might not come as such a surprise to hear that many single people are woefully unprepared for retirement.
Of course, there is a very real crisis around retirement savings for all Americans right now—not just the single ones. In 2017, 49% of adults aged 55 to 66 had absolutely zero retirement savings!
But single adults are much more likely to have no savings for retirement. According to the U.S. Census Bureau, 60% of adults who have never been married don’t have any retirement savings, as opposed to 35.3% of people who have been married once.
Once again, gender makes a difference. On average, women save 43% less than men for retirement, with single women 65 and over more likely to live in poverty than men their age. Because nearly half of all women aged 65 and older are single—either due to divorce, lower life expectancy of their male partners, or being single by choice—this puts women at the forefront of the retirement savings crisis.
Managing your debt while single
In spite of the fact that our financial system seems stacked against single people, many people remain single not because they can’t find a partner, but because they don’t want to. Case in point: in 2019, Pew found that about three out of 10 people don’t see marriage as an essential part of a fulfilling life. (How’s that for a culture shift?)
So where does that shift leave all those singles out there as they manage their finances while looking to the future?
Given all the ways being single can create a huge financial burden, it’s safe to assume a lot of unpartnered people are carrying debt they’re struggling to manage on their own.
If that sounds like you, we could help. JG Wentworth helps people drowning in unsecured debt lower and resolve their debt more quickly.* Imagine what your life would look like without debt: freedom to save, care for your kids, live comfortably, and plan for retirement. Managing your finances while single is easier with JG Wentworth at your side.
Want to hear more? Give us a call today at (888) 505-1794 to explore your debt options. As a single person, you might have more avenues toward a debt-free life than you think!
Sources cited
- TurboTax. (2022, December 1). 7 tax advantages of getting married. TurboTax. Retrieved from https://turbotax.intuit.com/tax-tips/marriage/7-tax-advantages-of-getting-married/L1XlLCh0m
- Parker, T. (2023, January 9). Why marriage makes financial sense. Investopedia. Retrieved from https://www.investopedia.com/financial-edge/0412/why-marriage-makes-financial-sense.aspx
- Fry, R., & Parker, K. (2021, October 5). Rising share of U.S. adults are living without a spouse or partner. Pew Research Center's Social & Demographic Trends Project. Retrieved from https://www.pewresearch.org/social-trends/2021/10/05/rising-share-of-u-s-adults-are-living-without-a-spouse-or-partner/
- Carpenter, J. (2022, August 16). Inflation widens married couples' money lead over their single friends. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/inflation-widens-married-couples-money-lead-over-their-single-friends-11660511872
- Murray, C. (2023, January 23). How much does it cost to live on your own? Money Under 30. Retrieved from https://www.moneyunder30.com/cost-to-live-alone
- Arnold, C. (2022, June 9). Rents across U.S. rise above $2,000 a month for the first time ever. NPR. Retrieved from https://www.npr.org/2022/06/09/1103919413/rents-across-u-s-rise-above-2-000-a-month-for-the-first-time-ever
- Semega, J., & Kollar, M. (2022, September 13). Income in the United States: 2021. Retrieved from https://www.census.gov/library/publications/2022/demo/p60-276.html
- Winck, B., & Hoff, M. (2022, February 8). These are the US cities where it's most expensive to live on your own. Business Insider. Retrieved from https://www.businessinsider.com/housing-market-most-expensive-cities-single-renter-apartment-prices-inflation-2022-2
- Pilossoph, L., & Wee, S. L. (2021, October). Household search and the marital wage premium. American Economic Journal: Macroeconomics. Retrieved from https://www.aeaweb.org/articles?id=10.1257%2Fmac.20180092
- Kent, A. H. (2022, May 9). Single mothers face difficulties with Slim Financial Cushions. Retrieved from https://www.stlouisfed.org/on-the-economy/2022/may/single-mothers-slim-financial-cushions
- King, B. (2022, January 13). Women more likely than men to have no retirement savings. Retrieved from https://www.census.gov/library/stories/2022/01/women-more-likely-than-men-to-have-no-retirement-savings.html
- Brown, A. (2020, August 8). 1. A profile of single Americans. Pew Research Center's Social & Demographic Trends Project. Retrieved from https://www.pewresearch.org/social-trends/2020/08/20/a-profile-of-single-americans/
- Menasce Horowitz, J., Graf, N., & Livingston, G. (2019, November 6). Marriage and cohabitation in the U.S. Pew Research Center's Social & Demographic Trends Project. Retrieved from https://www.pewresearch.org/social-trends/2019/11/06/marriage-and-cohabitation-in-the-u-s/
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