If you’re a single person you may well be paying an unfair financial price for that status, from groceries and holidays to eating out and general living expenses.
Those on their own have long faced extra costs which can mount up to thousands of pounds a year. By contrast, those in a relationship are more likely to have higher levels of disposable income as they are able to split many more costs in half. Even things like getting approved for a mortgage, or working out the amount you need to save in a pension for a comfortable retirement, can seem designed for couples.
Recent Standard Life research found that single pensioners need to have saved £225,000 more than couples to achieve a moderate standard of living in retirement (based on Pensions UK’s Retirement Living Standards). Let’s take a closer look at the financial implications of being single – and what you can do about it.
Single people also need to build resilience
Some singletons may be quick to argue that, not only do they not have the benefit of splitting the rent or mortgage – as well as the rest of the household bills – it’s also harder to be as ‘strong’ from an investment perspective, as there’s only one of you. However, further research shows that those in a couple are also stronger financially as individuals within that couple.
In other words, there’s no excuse for not investing, just because there’s only one of you. In fact, it is something you ought to be doing. Put simply, to build resilience, it’s not just couples who should invest; everyone should consider investing for medium to long-term financial goals. We have more on how to build an investing mindset.
Mind the gap
Research in 2024 by Hargreaves Lansdown revealed that when it comes to building finances for the future, people in couples invest nearly 20% more than single people. Using stocks and shares ISA values as indicators of their investments, Hargreaves Lansdown found that, on average, a single person has £4,600 invested. This compares with £5,408 for a person with a partner that has an additional ISA investment of their own, of the same amount.
Emma Wall, head of investment analysis and research at the firm, said: “This means that each of the partners is £807 better off than a single person, equating to an extra 18% individually, or £6,215 better off as a household.
“The difference between singles and couples then reveals that each person living as a couple has £2,073 more in an investment ISA than a single person. And, as a household, a couple has £32,089 more than a single person household.”
It’s nicer with a stocks and shares ISA
The research shows that a significant part of the difference comes down to the dearth of stocks-and-shares ISAs among single people. But there’s no two ways about it: investment ISAs are just as important a vehicle for individuals who are on their own as they are for those in a couple.
Under the current rules, you can squirrel away a neat £20,000 tax-free in ISAs – and these tax shelters are really quite straightforward to understand. What’s more, minor reforms mean it is now possible to subscribe to more than one of the same type of ISA in a single tax year. This means that you could, for example, pay into two stocks-and-shares ISAs, if you so wish. Read more on why it’s important to invest as well as save.
You don’t need to be rich to get started
There’s also a common misconception held by many people – including both those who are single and those in a couple – that you have to have a lot of money to invest, but this simply isn’t the case. You don’t need to have a huge combined income with a partner to make it doable.
Whatever your relationship status, you can invest from as little as £25 a month. As long as you are addressing problem debts, considering protection for your family, and putting aside enough emergency savings in cash, investing is the best way to work towards medium to long-term financial goals and build further financial resilience. Here are five reasons why drip-feeding your investments is a recipe for investment success.
Tips to help you build good investing habits
A simple way to get into good habits
No matter whether you’re single or in a relationship, setting up a direct debit to go out of your account on pay day is a simple way to get into a good habit. That way, you don’t even have to think about it. With most platforms, you can set up a regular investment from just £25 a month.
Know your goals
Understanding why you’re investing can be motivational and will help dictate how you invest. By setting clear investment goals for the short-, medium- and long-term, you can tailor your investments accordingly.
Steer clear of stock-picking
If you’re investing for the first time, the key is to look for broad market exposure at a low cost. More cautious investors might want to consider a multi-asset fund that has bonds mixed in.
Keep your eyes on the prize
As tempting as it may be, don’t focus on the day-to-day fluctuations of the stock market. Over the last 200 years, despite ups and downs, the stock market has been the best place for the longer-term investor to build their wealth. Hold your nerve and you’ll be rewarded over the long term.
Diversify
Reduce risk by spreading your investments across different sectors, countries and asset classes. Exactly how you diversify your investments will depend largely on factors including your age, circumstances, aims and appetite for risk.
Max out your workplace pension contributions
If you’re investing for the long-term and are employed, a sensible way to boost your household investments is by maxing out your workplace pension contributions. This is literally free money, as you get top-ups from both your employer and the Government. Your employer is required to contribute a minimum of 3%, and then you get valuable tax relief as well. Say, for example, you’re a basic-rate taxpayer and put £80 into your pension, HMRC will increase this to £100 to refund you for the 20% tax you originally paid.
Find the best investment platform for you
This will ensure you’re not paying more than you need to and that you get the level of investment choice and guidance that you want. Use our free comparison tools to identify the best platform for your needs while also keeping your costs down. If you’re not sure where to start, we pick out the best platforms for investors who want a helping hand.
Photo by Caleb George on Unsplash
