Ah, the single life. You get to do what you want, when you want to do it—and you don’t have to consult with anyone else when it’s time to make a big purchase.
But budgeting and planning for your financial future can be challenging for a party of one. While you have the freedom to make your own choices, that freedom can leave you guessing about which moves are right for you.
And it’s also tricky to plan ahead when you’re not sure what your future will look like. Maybe you’ll get married or live with someone down the line; maybe you won’t. Maybe you’ll want to settle down and buy a home; maybe you want the option to travel the globe on a whim.
Don’t let your single status become an excuse to avoid managing your finances and planning ahead. Here are a few strategies for thinking about your money as a single person.
Make a budget that works for you
So many tips for saving money require you to work together with other people, including the dreaded “Save hundreds every month by getting a roommate!” tip you see everywhere.
You don’t need to live in a group house at the age of 30-whatever to be an adult who saves money. (But if you do, that’s cool too.) You just need a budget that fits your needs.
“Try simplifying your finances and budget by using the 50/20/30 rule,” recommended Lauren Anastasio, a CFP with personal finance company SoFi. If you keep your fixed expenses to 50% of your monthly income, you’ll be able to funnel 20% toward your savings and still have 30% left for discretionary spending. “If there’s only one income going towards a savings goal, that’s OK, as long as you’re prioritising saving over other discretionary spending,” she said.
The 50/20/30 budget leaves you enough wiggle room that you can pivot if your priorities shift over time.
Set a foundation for growth
Of course, your priorities are bound to shift. Budgeting for single life in your 20s is different than managing your money in your 40s, for example. But the sooner you can set up a solid framework by budgeting and planning to save, the better off you’ll be.
If you’re in your 20s, you’ll want to focus on paying off your loans, starting to save for retirement, and getting used to a lifestyle that fits your means, Riley Adams, a CPA who blogs at The Young and Invested. As you get older, your income is likely to grow, giving you greater flexibility. “As you earn pay raises and advance in your career, it makes sense to begin assessing how much you can afford to contribute toward savings goals, home ownership, and anything else that fits inside your financial plan,” he said.
Chances are, you’ll have extra money to put toward your retirement savings or other goals. “You will have less overhead without children or other dependents, and you will hold sole responsibility for your financial progress,” Adams said.
Plus, since you don’t need to consult with anyone about your big financial decisions, you have the freedom to move around to take a higher-paying job if the opportunity arises, he noted.
Relish in how easy it is to be single
If you’ve ever bristled at the comment, “Oh, don’t worry, you’ll meet someone someday” when a relative stranger hears that you’re single, this one’s for you.
“Remember many married couples start their marriages with debt from a large party with a caterer and a bad DJ,” Anastasio said. “Once someone is married, they may also absorb the burden of their spouse’s prior debts. For half of people who are coupled, their partner is in a weaker financial position than they are.” And if half the relationship struggles with poor credit history or spending habits, that could be a significant financial burden, she said.
And look, filing your taxes jointly? It’s fine. But it’s not some secret to saving money on your taxes. “Filing jointly is often not a financial perk as much as it is a penalty,” Anastasio explained. “Income levels for tax brackets aren’t exactly twice as much for married couples as it is for someone filing singly, which means some couples who file jointly pay more than they would as two single people,” she said.
Stand firm in your choices
Three-week holiday alone? Go for it. Don’t want to play fifth wheel with your siblings? Don’t do it. It can be hard for people who haven’t been single for a while to see where you’re coming from with your financial priorities and choices.
But don’t feel like you need to bend over backward to make anybody but you happy. Remember this over the holidays especially—that wonderful time of year when everyone seems to wonder if you’re seeing anybody.
If you’re the only single person chipping in for the family gift, don’t feel like you have to pay more than your share just to keep things even. And don’t let your single status mean that you automatically have to travel to see family if they’re capable of travelling, too.