How to tackle your personal finances when you’re single

Dani Skerrett

by , Senior Content Marketing Manager

at PensionBee

21 Feb 2023 /  

Feb 2023

Woman sitting having a coffee with her laptop

Many of us will navigate through different relationships, and relationship statuses, over the course of our lives. But one relationship status that we’re likely to experience more than once is being single. There are a multitude of reasons as to why people are single, some might simply choose to enjoy living independently while others might be going through a separation or find themselves widowed.

The Office for National Statistics reported that the number of people living alone in the UK has increased by 8.3% over the last 10 years. On top of this, the number of opposite-sex marriages has fallen by 47% since 1972. With the number of single people growing over time, whether that’s people living alone or remaining unmarried, more and more are going to find themselves financially independent.

Whatever the reason may be as to why somebody’s single, what do they need to know about their personal finances in order to gain an advantage and embrace the benefits?

What’s the ‘singles tax’?

Sadly, there’s a financial cost to being single. People in couples may often benefit from dual income whereas single people are often paying a penalty on everyday costs for living alone. The ‘singles tax’ refers to the additional cost single people pay for things like:

  • Mortgage or rent payments

  • Household outgoings like bills and subscriptions

  • Groceries and travel

  • Holidays and social activities.

While the cost of living crisis is affecting people all over the UK, it’s been reported that single people are being impacted more than those who are in a couple. This means that all the costs they’re already fronting on their own, like energy bills, eating out and filling the car with petrol, have increased as inflation remains high.

Founder of This Girl Talks Money; Ellie Austin-Williams says: “When you’re single, even things like the cost of travel can have a huge impact on your financial situation. And while it makes sense from an economic perspective, it doesn’t make it any fairer.”

How to beat the ‘singles tax’

The cost of being single’s clear and while it seems unavoidable - we all have to eat, pay our bills and get ourselves to work - there are many ways that single people can gain a financial advantage and overcome these additional costs.

Avoiding extra everyday costs

Make sure you’re taking advantage of any discounts available to you - for example, single people are entitled to a 25% discount on Council Tax and, depending on your total household income, you might be missing out on other benefits, too. It’s well worth using a benefits calculator to double check what you’re entitled to.

Shopping and cooking for one person can be difficult, and the alternative of buying pre-prepared meals can be costly. So make the most of your weekly shop by bulk buying certain items and prepping your meals in advance. Spending a few hours each week or month batch cooking your meals has so many benefits - you’ll reduce food waste, save time on cooking during your day and you’ll save money on any spontaneous trips to the shop.

If you enjoy travelling, consider joining group trips as a way to bring the cost of exploring down. There are also benefits to booking things like travel ahead of time - whether that’s train tickets, flights and even airport transfers.

Weekends away, birthday parties, baby showers, weddings - these can all be more costly as a single person. So, if you have events coming up, why not see if you can split the cost of travel, a hotel room and even a gift with someone else?

Getting on the property ladder as a single person

Joining the property ladder can be daunting for people who’re splitting the cost with someone else, let alone those who’re doing it alone. While there’s a huge advantage to two people saving and entering into a mortgage agreement together, it’s entirely possible to purchase a house alone. But there are some key things to think about beforehand.

Firstly, if you’re buying alone, you’ll need a good credit score as you can’t fall back on a partner’s. So, clear any debts you have before applying for a mortgage and ensure you’re making your credit card, and any other payments, on time.

Secondly, consider your employment situation - if you’re self-employed, you’ll need to have a number of years of certified accounts and tax returns to support your mortgage application. There’s a great guide on MoneySuperMarket that can help self-employed people prepare for homeownership. If you’re thinking of moving jobs or industries, especially if it means taking even a slight pay cut, hold off until you’ve got your mortgage. Some lenders will require a number of months in your current employment before you’ll be accepted.

Thirdly, take advantage of any savings schemes available to you whether that’s starting a Lifetime ISA (LISA) to help you save for a deposit (and benefit from a 25% bonus from the government!) or looking into shared ownership or shared equity mortgages to help you get on the ladder with a smaller deposit. And finally, use as much professional advice as you can. Speak to a mortgage advisor and use free online tools like mortgage calculators.

Head of Content at PensionBee; Brooke Day says: “I always wanted to buy a house in London, but because I was single, I was kicking the responsibility down the line until I met someone. And one day I thought - this is ridiculous, why am I pinning this moment that I want on waiting for somebody else? I opened a Help to Buy ISA and started to take saving seriously.”

Insurance types to consider for single people

Being single means, while you don’t have a romantic partner that might be financially dependent on you, you also don’t have someone else’s financial stability to fall back on should you need it. For example, if you have an accident, become ill or cannot work for a period of time, having income protection gives you the security of an ongoing income.

There are also benefits to taking out life insurance if you’re single, especially if you have children as the money could be left to them if you were to pass away while they were still financially dependent on you. Or, it can be left to friends or family that might be financially disadvantaged if you were to pass away. This could be your parents or a friend that you were financially tied to - say you owned a property together or, they acted as a guarantor for you when taking out a loan. Taking out life insurance can help ensure you’re covered in circumstances like these as well as giving you peace of mind for the future.

Embracing financial independence

One of the best advantages of being single when it comes to your finances, is having the freedom to spend, save and invest your money exactly how you want to. Whether you’re deciding how to budget for the month or how to save for your future, you can do so without considering another person’s financial situation. As a single person, you don’t need to consider a partner’s salary, their spending and saving habits or their debts.

While managing your own finances does come with a sense of freedom, as a single person, investing for the future‘s even more important. So make sure your budget allows for stashing money away into emergency savings, and contributing as much as you can afford to your pension.

Founder of This Girl Talks Money; Ellie Austin-Williams says: “[As a single person] you can explore more, you can use your money how you want to use it, rather than how both of you collectively want to to use it. Which I think can be a really good thing.”

While as a single person you won’t benefit from dual income, you do have the opportunity to create additional streams of income. Why not use your single years to start a side hustle? If you own a property and have a spare room, you could rent it out to earn a passive income. Or, while you’re away, list your whole property on Airbnb.

In episode 14 of The Pension Confident Podcast, we discuss the impact your relationship status has on your finances - whether you’re single, cohabiting, separated, divorced, or widowed. Hear from the Founder of This Girl Talks Money; Ellie Austin-Williams, Barrister and Family Mediator; Paul Infield and Director (VP) Public Affairs at PensionBee; Becky O’Connor and listen to the episode, watch our guests in the studio or read the transcript now.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Anything discussed on the podcast should not be regarded as financial advice.

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