According to the latest data, single people spend 92% of their disposable income on living costs, compared with 83% for couples. Single adults spend significantly more on essentials than those in a couple: around £14,364 annually, compared with £12,684 per person in a couple. This means living alone costs nearly £2,000 more on average.
This is known as the “Single Tax” and refers to the cost of living and the additional financial burdens faced by those who live alone or provide for themselves financially. It’s not a formal government tax but rather an economic penalty for the inability to share fixed costs, such as rent, utilities, household bills, and subscriptions. Households with two or more people benefit significantly from sharing financial responsibilities, bulk buying, and splitting household costs.
We’re living through a difficult economic time, with a cost-of-living crisis and rising inflation; meaning everyone is struggling. However, the ‘single tax’ disproportionately affects those living alone. In fact, one in five young adults are delaying breakups because they cannot afford to live alone.
And it doesn’t just affect household bills. Singles pay more for almost every fixed cost, including food, holidays, and pet ownership, because most costs are priced per household rather than per person.
If you live alone and are looking for ways to save, here’s my practical solo saver’s guide, including tips on how to navigate bulk-buying, utility management, and council tax discounts to mitigate the additional £2000 spend:
Look for multi-person schemes
You may not have a partner, but there are plenty of schemes to take advantage of if you can link up with a friend or family member. Here are just a few:
- Save money by purchasing a joint gym membership rather than individual memberships. You might find you can get a cheaper rate, even if you don’t live together.
- Get a Two Together railcard to gain travel discounts if you know you’ll be travelling with a friend.
- Take advantage of refer-a-friend schemes, where you can sometimes receive cash or a discount for introducing someone else to a company. You’ll both save money on things like energy, broadband, mobile contracts, cashback, and shopping.
However, always check the terms and conditions to confirm whether you need to use the same address before you join.
Apply for council tax exemptions & reductions
If you live alone, you can get a 25% discount on your council tax, regardless of your income. If you’re struggling to pay despite having the 25% reduction on your council tax bill, you could potentially get 50% or 100% off your bill if you qualify as a ‘disregarded person’. This includes anyone who is:
- Under 18 years old
- On certain apprenticeships
- 18 or 19 years old and in full-time education
- A full-time student at college or university
- Under 25 years old and get funding from the Education and Skills Funding Agency
- A student nurse
- A foreign language assistant registered with the British Council
- Severely mentally impaired
- A live-in carer for someone who is not your partner, spouse, or child under 18
- A diplomat
If you live on your own or are ‘disregarded’, you’re eligible for 25% off your bill. If you’re not ‘disregarded’ but everyone else within your household is, you’re eligible for 25% off. If everyone living in your home is ‘disregarded’, you’ll receive 50% off.
Lastly, if you or someone you live with is disabled, you’re likely to be eligible for a council tax reduction. You can apply for these discounts by contacting your local council.
Install a water meter
Most people living alone should benefit from having a water meter installed. These charges are based on the amount of water you actually use. Without one, your bills will be estimated based on your property’s size. Therefore, you could be charged far more than you actually need to pay.
However, you should be careful with a meter, especially if you take long showers or water your garden regularly. But generally, if your home has more bedrooms than occupants, a water meter will almost certainly save you money. Citizens Advice has more information on whether switching to a water meter is right for youon their website.
Share subscriptions
Many subscriptions, such as Spotify, YouTube, and Disney+, offer family plans that allow multiple users, particularly when more than one person uses or pays for the same service. Check whether the streaming services you’re subscribed to offer any family plans or benefits, and then see whether any of your friends and family want to pool your subscription costs. If a single person shares a plan with siblings or friends (where T&Cs allow), you can reduce a £15-per-month bill to £3. Always check if the provider requires you to live at the same address before signing up.
Car insurance savings
To save money on your car insurance, you could add a parent or sibling as a named driver to lower premiums. However, it’s important not to designate someone else as a ‘main’ driver when they aren’t; this is insurance fraud, known as fronting.
Rent out spare rooms
If you live alone and have spare rooms, you could earn extra income by renting them out. Websites like Airbnb and SpareRoom can help you connect with other potential tenants for free, or you can pay to boost your ad. If you take in a permanent lodger, it could provide a steady income.
There are some things to consider when renting out rooms in your property. The ‘Rent a Room Scheme’ allows you to earn up to £7,500 per year tax-free, and if this income is shared with someone else, then the tax-free allowance is halved. You should also inform your insurer that you’re renting out a room, as this may affect your home contents insurance.
Lastly, if you own your home and are renting out a room, you should notify your mortgage lender, as your loan terms may not permit it.
Rent out unused car parking spaces
If you no longer drive or have enough room for more than two cars on the driveway, then you can also make some additional cash by renting out an unused car parking space. The amount you can earn will ultimately depend on where you live, but you could earn anything from a few pounds per day to several hundred a month.
For example, JustPark hosts can earn an average of around £320 per year, but some have reportedly earned up to £4,000. Websites like ParkLet, YourParkingSpace, and JustPark can help you advertise your space and see how much you can earn. Some are free, but others charge a fee, so it’s worth checking which is best for you.
This can be particularly lucrative if you live in a big city, near an event, a football stadium, an airport, or a train station. Bear in mind that this is available only if you have an off-street parking spot on your property.
Things to remember: Check whether you need to report income from selling personal possessions, goods, or services; creating online content; or renting out property through digital platforms. You can find out more on the government website.
Save on the food shop
To save money on groceries or at the food shop, avoid buying small, expensive portions. You could use a freezer for batch cooking, or buy items in bulk and split them between friends and family. You could also shop at a specific time (usually in the evening) to take advantage of reduced prices, then freeze the items for later use. If possible, plan your meals in advance to avoid impulse buying and waste, and check that you have the necessary ingredients before you go shopping.
Futureproof your finances
When living alone, you risk not having a financial safety net. Couples can often lean on each other when one person loses a job, falls ill, or faces a large repair bill. If you’re single, you are your own insurance. You should try to have at least three to six months of essential expenses held in an instant-access savings account. This prevents you from taking out high-interest loans or credit card debt in an emergency, which can be devastating for a single-income household.
The ‘single tax’ also follows you through to retirement. Data shows that a single person needs between £330,000 and £490,000 in their pension pot for a moderate retirement, while couples need just half as much (around £165,000 to £250,000 each). If you’re employed, your employer’s pension contribution is effectively “free money”, so it’s important not to opt out. At a minimum, contribute enough to get the full employer match. Even small increases in your contributions now can lead to tens of thousands of pounds more in retirement. Use “Salary Sacrifice” if your employer offers it; it’s the most tax-efficient way to save.
Try a money-saving challenge
Saving money each month, even small amounts, can not only be great for your balance but also your mental health. As well as gaining a sense of accomplishment, you’ll reduce stress and anxiety by building up your financial safety net. But it can be difficult, especially when you’re already struggling financially. Many digital banking apps now allow you to automate your savings with ‘Round-ups’ or automated ‘Pots,’ making it easier to stay on track and build your savings without manual effort.
Here are some of my favourite savings challenges:
- 1p challenge – You start by saving 1p on the very first day of the year, then add an extra 1p every day, e.g., day 1 = 1p, day 2 = 2p, day 365 = £3.65. It’s a great way to ease into saving money and stay accountable. Plus, within a year, you’d have saved an impressive £667.95. You could always up this as you go if you’re able to save more money.
- £1 challenge – Similar to the 1p challenge, but this involves saving £1 each, so in your average year, you’ll save £365. This is good if you don’t have a massive income, want to start off small, or just want to build a small savings pot.
- 52-week money challenge – With this, you’ll save yourself £1,378 by the end of the year. Essentially, you save weekly rather than daily with this challenge, and the amount goes up incrementally. For example, you’ll save £1 for each week you’re on in the year. So week one = £1, week three = £3 and week 52 = £52. Like the larger daily challenges, this requires more effort and a little more money, as you’ll be putting significant sums into your pot by the end. However, it may seem easier because you start off small and gradually increase the amount.
- Monthly savings challenge – The 12-month savings challenge encourages you to save money each month, and you can save as much or as little as you like. If you start with £10, for example, and increase this each month by £10, so January = £10, March = £30, and so on, then by the end of the year, you’ll have saved £780.
- No-spend challenge: One of the simplest; this involves committing to not spending any money on anything that isn’t essential for a set period. This differs because you’re not saving a specific amount; you will save by avoiding unnecessary spending. After this period, you can then decide to save this amount in a savings pot, use it as additional income, or pay off any debts.
Credit: Liz Hunter, Commercial Director at MoneyExpert
Photo by Jin H: https://www.pexels.com/photo/woman-looking-out-of-window-4383361/
