Living alone? You're not alone! Single-person households are making a big economic impact. This post from LearnVest explains why.
Singles are the new couples.
… at least, economically speaking.
There are more single-person households in the United States than ever before, and they're making a major economic impact, one Lean Cuisine at a time.
In fact, solo dwellers spend more per person than the highest-spending families with children. A lot more. If you're wondering how that's possible, we've got details below. (Now what was that about kids being so expensive?)
The media has seized this idea of the single-person household, examining everything from its impact on the economy to the "strange" habits sole dwellers adopt (speaking to yourself out loud en français, peut-etre, or forgetting to close the bathroom door when people come over?)
So how did we get to a point where singletons (people who live alone) make up such a huge part of the population? And how exactly are they actually influencing the economy? And if you're one of these fascinating creatures, what considerations should you have when running a single-person household? We'll tell you.
Why Are We Living Alone?
In an interview with The New York Times, NYU sociology professor Eric Klinenberg, who interviewed more than 300 people and mined generations of data for his book Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone, says that, "what we've learned in the last 50 years is that people will live alone whenever and wherever they can afford to do it."
The causes and effects of living alone, after the break.
In the United States, 28% of all households currently consist of only one person, according to Klinenberg's article in Fortune. That's the highest percentage ever, which translates to about 30 million people — 18 million of whom are women. In London, Paris and New York, fully half all households have only one occupant; in Stockholm, that number is more like 60%. It's no coincidence that at the same time, marriage in the U.S. is at a record-low 51%.
Now that more people are marrying later (half of women marry for the first time after age 27), relying on parental financial support past college and delaying having children, there are few true indicators of adulthood. Getting your own place is one of the last ones remaining.
Also, the American work culture lends itself to solo living. After 50 hours per week of popping into meetings and by co-workers' desks, many of us are in need of some alone time. The forced social interaction of the office stands in for the company we could have had at home.
In fact, although in the abstract people say they would like to live with a romantic partner, fewer than expected are willing to compromise their solo lifestyles. Living alone is a choice.
The Economic Impact of Singles
While the adage is that married people build wealth, singles seem to spend it. They contribute an annual $1.9 trillion to the economy and spent more than $34,000 per person in 2010, which is about $6,500 more than married individuals without kids and $11,500 more than the highest-spending families with children. Singles also buy a whopping one-third of homes.
Their spending is partly due to what journalist Ethan Watters calls "urban tribes": close-knit groups of single friends that substitute for the traditional family structure. Klinenberg found that many of the singles he spoke to complained not of loneliness, but of over-socialization. There simply isn't enough time for all of their commitments. And going out usually costs more than staying at home.
Their spending power has risen so much that even corporations are beginning to target them. As Klinenberg describes in Fortune, companies such as realtor Coldwell Banker, home-improvement retailer Lowe's and car company Chevrolet are courting singletons and featuring them in ads. Food and alcohol retailers are emphasizing groups of friends and instituting communal tables for large groups. Even diamond jeweler DeBeers is selling a "right-hand ring" for unmarried women.
That's because many companies are finding that the primary consumers of their products are single — Nestle reports that 90% of its Lean Cuisine meals are eaten alone and Ikea discloses that sales of its pieces for "small space" living are on the rise — and the smaller the space, the more likely it only holds one person.
If You're the Only One in Your Household …
You have some different considerations when it comes to your finances: Yes, you may have more disposable income since you're not supporting children, but your expenses are also higher when you're the only one contributing to the rent, mortgage or utilities, and the only one buying groceries and paper towels (although since one person uses less than two, it may balance out at the grocery store).
Just how much more expensive your life is can be explained by the "square root rule": The cost of living is the square root of the number of people living together. The square root of 1 is 1, meaning all the costs are yours to take care of. But living with two people means together the cost of living is the square root of 2, or 1.414. So if you live with someone else, whether they are a roommate or a significant other, you'll pay 70% of what you would pay if you were living alone. Living with two other people brings your expenses down to 50% of what it would cost to live alone (unless, of course that person is a child and not contributing to the household income).
The first and most important thing singletons can do is set up a budget. Our My Money Center will help you with that, as well as your next step — tracking your spending to regulate exactly how much money is going to outings with your "urban tribe."
While our parents' generation might have balked at a one-person household, ours recognizes it for what it is: the ultimate luxury.
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