There are definite benefits to being single, like living on your own terms and spending your nonworking hours doing exactly what you want to do. But, from a financial standpoint, not being part of a couple can be challenging because of the “singles tax.”
The singles tax refers to the added costs people commonly bear when they’re navigating life solo. If you’ve ever tried to book a cruise as a single traveler, for example, you may have noticed that your cost was more than 50% of a room with double occupancy. That’s the singles tax for you.
In the context of renting or buying, singles don’t necessarily incur additional costs that couples don’t. But singles bear the entire cost of renting, buying and maintaining a home without a second income to help cover the expenses.
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What’s the Cost of the Singles Tax?
A report from Zillow released this year found that singles living alone in one-bedroom homes spend nearly $7,000 more than the amount a couple might spend when splitting that cost down the middle. And in larger cities like New York, a single person might pay up to $19,500 more per year than someone living with a partner in a one-bedroom apartment.
Nicole Beauchamp, real estate broker at Sotheby’s International Realty in New York, has been helping renters — single and otherwise — find homes for more than 20 years. She says for singles, finding a rental can be “super challenging in high-cost cities.”
But even if you’re in a city that’s more affordable, the reality is that living alone can be costly. So here are some tips to make solo living more manageable.
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1. Know What You Can Afford to Spend
Single people have to be very mindful of how much they spend on housing, says Beauchamp, since they don’t have a second income to fall back on. So as you go about the process of finding a rental, set a limit.
“You want to look at places that really fall well within your budget,” says Beauchamp. “And the rule of thumb is 30% to 33% of your income as your housing budget.”
This is good guidance for all renters. But Beauchamp especially stresses the importance of sticking to that 30% to 33% threshold with her single clients.
“You only have one income to work with,” she says. “And if it goes away temporarily, you want leeway.”
That limit isn’t what you should spend on rent alone. “That’s all the things associated with housing, like utilities,” Beauchamp says.
2. Set Priorities for What You Want
Beauchamp understands the importance of finding a comfortable home in a great location with all of the right amenities. But sometimes, she cautions, you can’t have it all, especially when you only have one income.
Determine what’s most important to you. If it’s the location of your home, consider a smaller space that meets your needs. Or if you need more square footage, consider giving up amenities like a doorman or a gym.
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3. Consider a Roommate – but Find the Right One
Beauchamp recognizes that many people who are single don’t want to share their living space with a roommate. But, if having a larger home in the right neighborhood is important to you, that may be a route to consider.
However, it’s important to find the right roommate.
Beauchamp suggests trying to find a roommate through people you know. If you have a colleague who can vouch for their cousin who’s moving to your city for the first time and needs to share housing, that gives you a basic level of comfort.
But also, says Beauchamp, “Ask what feels like uncomfortable questions. You need to know that you’re linking up with someone who’s also financially responsible.”
Beauchamp suggests asking a prospective roommate about their job status, income and credit history. “You can ask for a general sense if they don’t want to give a number,” she says, “but be wary of living with someone who won’t be open.”
Beauchamp also insists it’s important to get references from past roommates before allowing a stranger to live with you. “What if the person has a history of not paying rent or not staying for the full term of the lease?” she says. “You don’t want to get a roommate to alleviate your financial stress only for it to create more stress.”
4. Consider Short-Term Rentals if Your Living Situation Is Flexible
Pursuing a series of short-term rentals could be advantageous if you’re single. But there are definite drawbacks.
“Single people don’t always want to be tied down in these longer-term leases,” says Beauchamp. “So you might be willing to pay a premium for the flexibility of not having to stay in the same space for an extended period of time.”
However, she cautions that unless you’re spending a good part of the month in an area that’s significantly cheaper, short-term rental hopping is probably not going to save you money. There are numerous fees involved to rent a home for just a few nights, from booking fees to cleaning fees. So while you might gain some flexibility, you may not come out ahead financially.
“I can’t imagine it being cheaper in the long run,” says Beauchamp. “[Short-term rental hopping] is viable for someone very minimalist who basically lives out of a suitcase, but it seems like a really complicated way to live.”
5. Look for Ways to Save on Non-Housing Costs
If you have your heart set on a certain city, or you need to be in a particular city because of your job, then you may not have much wiggle room when it comes to paying rent. In that case, Beauchamp suggests finding ways to keep other costs down.
“If you have a larger space, put it to good use,” she says. That could mean having potluck dinners instead of paying for restaurant meals, or hosting happy hours instead of going out.
Beauchamp also suggests looking at meal delivery services to cut your costs. “Grocery shopping can be more expensive for singles,” she says. “Maybe you explore a meal delivery service that’s cheaper than Uber Eats and takeout.”
6. Have Realistic Expectations for Moving to a Big City
There are steps you can take to cover the cost of rent as a single person, but it’s just as important to make sure you’re signing a lease in a given city for the right reason.
“You may want a big city to meet people, socialize,” Beauchamp says. “But if you’re paying a fortune for rent, that may not be feasible.”
Before you stretch your budget, think about what you want not just out of a home, but overall. “Look at the big picture and choose a locale that allows you to have a comfortable home as well as money left over to be able to actually enjoy your life.”
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Can You Afford to Live Alone? How to Avoid the Singles Tax originally appeared on usnews.com
