Living alone has its perks. You get to watch what you want on TV, there are no timetable tussles for the shower, and no one steals your leftovers from the fridge.
But flying solo comes at a cost.
Renters living alone in a one-bedroom apartment face a yearly ‘singles tax’ of up to $19,500 in America’s most expensive cities, according to a new report from real estate giant Zillow.
Nationwide, singles pay nearly $7,000 extra per year to live alone in a one-bedroom apartment — but don’t despair, there are ways to turn use that independence to your financial advantage.
The singles tax
The size of the so-called ‘singles tax’ — how much more you pay per year compared to a couple living in the same apartment — varies widely depending on where you live.
Singles in New York can pay up to $19,500 more a year than someone living with a partner in the same one-bedroom apartment, according to StreetEasy data. The premium jumps to nearly $24,000 in Manhattan.
Other cities sucking the savings out of single Americans include San Francisco, with a $14,000 ‘singles tax’ for a one-bedroom apartment, San Jose ($12,401), San Diego ($11,774) and Boston ($11,546).
If you want to live alone in a big city, but you’re looking to save some dollars and dimes, Detroit and Cleveland might be your best options. According to Zillow, they have the lowest ‘singles tax’ out of the 50 largest US cities (by population) at $4,483 and $4,387 respectively.
On the other end of the spectrum from the “singles tax” is the “couples discount”. Couples get to split everyday costs like rent or groceries and they can also have some tax advantages.
Zillow found that couples save an average of $14,000 by living together, compared to renters living solo. In the most expensive areas, like New York City and San Francisco, couples can save up to $39,000 or $28,227 respectively.
The US rental market is not only tough for singles. Rents across the country have been stubbornly high for the past few years because people can’t afford to buy homes. This means there’s been growing demand and shrinking supply in the rental market, which has pushed up prices.
In January, renters in apartments and [single-family homes paid 8.6% more than they would have 12-months ago, according to the National Association of Realtors (NAR). The monthly rent change was 0.7% or 8.8% on an annualized basis.
But some believe rent relief is on the way.
“Apartment construction activity is at a 40-year high. As these new empty units steadily reach the market, rent growth will tame down,” the NAR’s Lawrence Yun wrote in a blog post. “That will also pull back the overall consumer price inflation.”
However, Zillow’s home trends expert Amanda Pendleton urged renters to be cautious.
“Even though rent prices are starting to cool, they are still significantly higher than they were a year ago,” she said. “Renters considering going solo this year must decide how valuable living alone is to them, and if the cost is worth it.”
If you do opt for the single lifestyle, here are some steps you can take to shore up your financial security.
Read more: Earn extra cash for your weekend with these quick money hacks
Take control of your finances
Of course, the easiest way to avoid paying the ‘singles tax’ is to live with a roommate and split some costs — but sharing your home space is a personal choice that has to be right for you.
Being single means that any financial mistakes you make may carry more risk. If you choose to live alone but are worried about your budget being stretched beyond what you can handle, there are other ways to protect your finances.
One way to reduce your financial stress is to lower your debts. For example, you should try to avoid carrying a balance on your credit card.
If you don’t keep up with your monthly payments, you could end up paying interest on your interest, and your balance can quickly spiral out of control.
The same goes for other types of loans, like car loans. If interest rates are sapping every last bit of income you have for the month, you can consolidate your debt into one lower-interest loan.
If you’re paying for rent on your own, chances are you’re also covering car costs solo. As the costs of car ownership grow more cumbersome, you can also take a look at your current auto insurance policy and shop around for a better rate to help bring those monthly bills down.
Finally, it’s important to make sure you’ve taken the necessary steps to protect your wealth if things go sideways — for example, if you lose your job — because you can’t rely on a partner to pick up the slack.
Keeping an emergency fund with about three months worth of money — including all expenses like rent, bills, groceries, loan payments, car expenses and so on — is important to becoming financially secure.
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.