How and Why to Spend Less Selfishly
As an unmarried 20-something, I have a confession to make: I love being selfish with my money. Without having to negotiate financial goals with a spouse or cover the exorbitant cost of a dependent, my extra dollars of income each month are free to finance dinner at the newest restaurants in town, fund trips to exotic, international locales and fiercely pursue all of my personal and professional goals.
Somewhere in between spending my year-end money on my last vacation and pouring cash into the redesign of my website, however, I thought about what my financial selfishness might be costing me: my financial future.
According to the National Bureau of Economic Research, single people amass fewer savings than married couples, even when accounting for married households having twice as many people. The findings showed married couples had an average of $111,600 in retirement savings, while singles only had an average of $12,500 saved. That's a big disparity.
The National Bureau of Economic Research attributes some of these vast disparities to a difference in mindset between couples and singles. The researchers suggest that knowing that they need to save for two people leads couples to save sooner and more aggressively.
This hypothesis is supported by research reported in the 2011 Consumer Survey Anthology, which found that single people in their late 20s earn per-capita incomes comparable to those of married couples in their late 20s, but, with the exception of healthcare, spend significantly more in each expense category.
While married couples certainly benefit from sharing basic living costs such as housing, utilities and cable, the large spending discrepancies cannot be attributed to those savings entirely. Take food for example. While single people who lived alone spent $3,654 on average, a family of four spent about $2,400 per person per year.
That gap could easily be reduced if singles employed some of the same strategies as couples and families in their food spending, such as sharing the cost of a warehouse membership, buying nonperishables in bulk, batch cooking and communal dining. Even housing costs, often the biggest spending separator between couples and singles, could be significantly reduced by sharing rent and other related housing expenses with roommates.
In continually spending like they're single, singles not only jeopardize the finances of their future selves, but also the options available to them should they decide to couple up or pursue other goals, including a wedding or a down payment on a home.
Even singles who plan on staying single should reflect on the habit of spending like they're single. With only themselves as a source of income, they will need more emergency and retirement savings should they encounter job loss, a medical emergency or a disability.
Whether "single" is a temporary marital status or a title you intend to hold onto, spending like you're single can put your future self, dreams and goals at risk. Follow these steps to keep your options open in the long-term, be they on your own or with a partner:
Prioritize savings. Rather than covering the necessities and whimsically spending or saving whatever's left at the end of the month, singles should set aside savings and retirement contributions at the start of each month, treating their future selves with the same respect and non-negotiability with which they treat the rest of their bills.
Reassess recurring expenses. It's not just travel and entertainment eating up the single budget; it's necessary expenses like food and housing where singles often outspend their coupled counterparts. If singles can reduce their cost of living, employing the savings strategies used by couples, such as shared housing and bulk buying, then they'll have more to set aside for their future.
Budget in the fun stuff. Spending with your future self in mind doesn't mean cutting out all discretionary expenses. Plan for fun by building it into the budget. Knowing and staying within the parameters of what entertainment, travel and fun you can afford will allow you to enjoy your here and now without sacrificing your tomorrow.
Being single can be exciting. It allows you great flexibility and freedom to be selfish with your resources. Just be sure that freedom isn't coming at the expense of your future self, including your needs, goals, hopes and dreams.
Stefanie O'Connell is a New York City based actress and freelance writer. She chronicles her struggle to "live the dream" on a starving artists' budget at thebrokeandbeautifullife.com.
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