As a single person, it sometimes feels as if the world is partial to couples. Perhaps you’re like me—tired of checking that “single” box on your tax return while your married counterparts file jointly and gleefully claim dependents. You see a family buying in bulk at the supermarket and wish you could take such cost-saving measures without having to eat spaghetti every night for a month. Or you wonder what you’d do with the extra cash if your rent was suddenly halved.
Sure, families get tax breaks and cohabitaters have lower living expenses, but there are some financial upsides to being on your own, especially during an economic downturn. The truth is, with fewer responsibilities, singles are freer to take risks and find novel ways of coping with the stress of a Great Recession. Finally, the singletons have some advantages.
? Some joint filers have to shoulder something called the “marriage penalty,” a quirk of our bracketed tax system that has couples making roughly the same income paying more than if they were filing as singles. Recent measures by Congress to reduce the penalty will run out in 2011 unless they’re reauthorized. But what does that matter to you? You’re single!
? Take it from Ruth Madoff, the shared financial liability that comes with marriage can be a real downer. If a married person’s debts get called in, the IRS comes knocking. If a lawsuit bankrupts your partner, or he’s running a billion-dollar Ponzi scheme, your assets can be vulnerable, even after a divorce. Not so for singles or unmarried couples.
? Without a laid-off spouse to support or kids to worry about sending to college, you can afford to take more risks with your money. If you have time to watch your investments mature (i.e., you’re young and not planning on retiring early), now is the time to be more aggressive. Lisa Forcke, a certified financial planner in Richmond, Virginia, recommends equity mutual funds as a good place to start. No one can guarantee returns (even Madoff), but Forcke says, “I don’t think I will ever see prices this low again in my lifetime. This is a huge opportunity.”
? If you do have discretionary income that’s not going toward piano lessons or wedding planners, consider upping your 401k contribution (if it’s not already maxed out). This is something many young singles don’t think to do. Your contributions typically buy shares in a mutual fund or money market, and according to Forcke, a recession is a “really good time to buy more shares at a lower price.”
? If you don’t have a spouse or children to care for after an untimely demise, you probably don’t need life insurance, which could save you hundreds to thousands of dollars a year. That’s a lot of mani-pedis … or 401k shares.
? In this market, a lot of people are having to take second jobs or more work to make ends meet. It’s a heck of a lot easier to do this when you’re not shuttling between soccer practice and ballet rehearsal or trying to get dinner on the table by six.
? Some homeowners are renting out spare rooms for extra cash. Roommate listings on Craigslist increased nearly 65 percent nationwide from 2007 to 2008. Most lodgers, however, aren’t looking to shack up with a family or play third wheel to a married couple and will pay more to live with a single roommate. An added bonus: the limits on deductions for rental real estate are the same for singles as they are for joint filers, so singles might see an advantage.
? I know it doesn’t sound terribly appealing, but if you’re really hurting, you might consider moving back in with parents. “Your place or my parents’” may not be the best pickup line, but it could help you weather the financial storm until you’re back on your own two feet.
? You’re the only one responsible for your credit score. Credit bureaus keep a score for each individual, married or unmarried, but couples with shared accounts might suffer from a spouse’s inability to turn down a sale. In some states, when you marry a person, you marry his debt as well. At least when you’re single, you’re the lone master of your credit domain.
? If you’ve found yourself unemployed—or you just can’t stand to look at the inside of the same cubicle for one more day—as a single, you might have more latitude to risk a career change or accept a pay cut in exchange for a more satisfying job.
? Unemployment has hit a record high, with over 5.5 million people claiming benefits—the most since the government started recording in 1967. If you’re not working, take advantage of this time to travel (on a shoestring budget). That’s something you can’t do when you’re hording vacation hours or tied down to a spouse or family that can’t take off at a moment’s notice. An added bonus: a forced vacation may relieve stress.
? Dates pay your way. Before the feminists out there let out a collective scream, let’s be honest. Every once in awhile, it’s nice to let the guy pay on a date. My own informal poll shows that six out of six men actually want to pay. So let them. It’s a recession. Long live chivalry!
The bottom line is as a single during a recession, you should be even more thankful to be footloose if not fancy-free. “The biggest advantage of young [single] people is having more flexibility,” says Forcke. And look at it this way—financial stress is one of the top reasons marriages dissolve. At least you won’t be going down that road—divorce is very expensive.