#Adulting101 : Living the single life
Financial planning for life as a solo individual
It might seem that being single would be great for your finances, not just from a cost-perspective, but also in flexibility and autonomy—as a single person, you’d have more control over your financial and life decisions, from your career to your retirement plans.
In comparison, there are some very obvious reasons why one would think that being in a relationship or being married would be more expensive. Firstly, there’s the cost of the wedding and the honeymoon, which can cost anything between $7,000 to $50,000. On top of that, we know that having kids is expensive too. An article by NUS economists in 2018 estimates the total cost of child-rearing to be at $280,000. Even if couples choose to not have children, there is still the possibility of divorce, which could potentially bring with it many financial consequences in the form of legal fees and divorce settlements.
But of course, there are always trade-offs, and the finances of a single life may not be as good as it seems.
Regardless of whether you’re intentionally choosing to stay single, or you’re still finding the right person, here are some important things you need to know about the finances of being single in today’s society.
Being single can be more expensive than being in a relationship
Here are some reasons why costs of living as a couple may be less expensive than that of a single person:
1. Sharing of basic living and lifestyle expenses
While expenses like food and groceries will naturally increase proportionately by the number of people, some expenses can be split between two people without a decrease in the quality of life. For instance, rent or mortgage payments, utilities, car payments, furniture and even entertainment costs like Netflix can easily be shared. If you’re a single person bearing these costs on your own, it can definitely be more expensive. Besides living expenses, lifestyle expenses such as travel may also cost less per person if you are going as a couple or a family.
2. Couples can save more together
Given that many living and lifestyle expenses can be shared as a couple, and many couples are also a dual-income household, it is no surprise that a couple would have greater savings ability together rather than individually.
3. Housing in Singapore is more favourable towards married couples
If you’re looking to buy a house in Singapore as a single person, then you may already know how unfavourable the property market is to single people. As of today, affordable housing in the form of BTOs are only accessible to singles if they are above 35 years old, and only in a limited capacity (only 2-room flats, in non-mature estates). The only other options would be to look at the HDB resale flat market (also only available to singles after they turn 35 years old), or private property. Taking into account that you’ll have to foot the downpayment and renovation costs on your own, it would be fair to say that buying a home as a single person would be far more expensive than your coupled counterparts.
What are some considerations to have when planning your finances as a single person?
With those reasons in mind, there are a few things to consider in your financial planning which would be unique to you and your status as a single person.
1. Emergency fund
If you are the only person supporting yourself, a loss of income could potentially be more serious than your coupled counterparts. Coupled people in dual-income households will only lose part of their combined income should one person lose their job, but a single income-earner may not have a back-up option to support them in the same way. In that case, you may want to have 6 to 12 months worth of emergency savings to tide you over this period as you find another source of income.
2. Plan for healthcare expenses
In the same vein, if you lose your income source due to an accident or a disability, you will need to have measures in place to protect yourself financially. Assess your insurance portfolio to make sure you are adequately covered for hospitalisation bills, as well as critical illness. You can also consider disability income insurance in case of any accidents or illnesses that could prevent you from working.
3. Housing plans
As mentioned in the previous section about buying a home in Singapore as a couple versus a single person, the conclusion is that it is generally far more expensive to buy property if you are single. While it is definitely not impossible, it’ll certainly take more resources to get there. Start planning your finances early and figure out a feasible savings plan for you to achieve this goal. Consider speaking to a financial advisor if you need clarity and advice on how you can work towards buying a home in the future.
4. Retirement plans
Similar to housing, you may have a wider gap in your finances when planning for your lifestyle and expenses after retirement. Maximise the power of compound interest and start building your retirement nest egg as early as possible. Seek the professional advice of a financial advisor to help you with your planning.
5. Insurance beneficiaries and will planning
Even if you don’t have dependents that you need to support, it would still be valuable to seriously consider your insurance beneficiaries in the event of your death. In this way, you can ensure that your insurance and assets will go to the people (e.g. relatives, or friends) or organisations that you choose.
Don’t put off financial planning just because you’re single
It may be tempting to put off financial planning if you’re expecting your status to change in the future. However, it would be prudent to set a plan in motion and make adjustments later on, rather than start later with a much shorter runway.
One last thing: just because you’re single, that doesn’t mean you have no family. Don’t forget your parents, siblings, relatives and friends—all of whom matter just as much, if not more, than the idea of a future potential partner.
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