If you live alone, you’ve likely found yourself spending more on bills, groceries and rent compared to your coupled-up friends.
Our latest Savings and Resilience tool, produced with Oxford Economics, shows singles often face a ‘singles tax’, making it harder to be financially resilient compared to couples.
But, what is the singles tax and what can you do to boost your financial health?
This article isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice.
What is the singles tax?
The singles tax is the extra financial burden single people face because they don’t share household costs with a partner.
By 2039, there will be almost 11 million people living in a single-person household, so it’s something that could affect more of us.
Since the pandemic, this issue has become even more noticeable. While many households have seen their financial resilience improve, single people haven't benefited nearly as much.
A growing gap – couples vs. singles
There’s a clear gap between the financial resilience of couples and singles.
On average, singles spend £8,100 a year on housing, bills, and groceries, slightly more than the £7,800 per person for couples. However, as a percentage of their income, singles are spending 36% on essentials compared to 29% for couples.
This means singles have less left for fun.
Couples spend about 30% more per person on dining out and almost 20% more on entertainment than singles do.
Those who are single parents have it particularly tough.
Many can't work full-time due to childcare duties, and they face higher costs with less income. Well over two thirds of single-parent households have poor financial resilience, often struggling with bills and debt.
4 tips to improve your financial resilience
While the singles tax is a real challenge, there are ways to improve your financial situation.
Make sure you get your council tax discount
Single people get a 25% discount. It doesn’t seem like enough given there are half as many people living there, but it’s a start.
Install a water meter
Usually if you have the same number of bedrooms as people (or more) you can save money, because otherwise water is priced by the size of the property. It also puts you in more control of how much you have to pay for.
Consider including a parent as a second named driver on your car insurance
They can then use it in emergencies, and assuming they’re considered a low-risk driver, this could also cut your premiums.
Take advantage of any tax breaks you can afford
From pensions to ISAs. The tax system is stacked against you, from the marriage allowance to the inheritance tax exemption for couples, so make the most of what you can.
Listen to our investment podcast to find out more about what our experts have to say about the ‘singles tax’.
