Personal Finance for Single People

When it comes to personal finance, being single has its perks. As the captain of your own financial ship, there’s no obligation to get approval from a partner when you feel the urge to indulge. On the flipside, the self-reliance that comes with that freedom can feel overwhelming at times, especially when money is tight.

Life’s more expensive when you’re single — that’s the truth, and we’ll cover that a bit more later on. But how do you make a single income work when everything’s getting more expensive?

Think about it: you’re expected to pay the same amount for a hotel room that a couple would normally split. 

The same amount for a one-bedroom apartment. 

The same amount for all of your holiday Christmas shopping. 

Plus, you don’t have the same safety net as someone who has a partner to lean on, which might make debt feel that much more intimidating. If that resonates with you, know that Credit Canada supports thousands of coupled and single Canadians with sustainable debt relief options. 

Our CEO Bruce Sellery chatted with financial planner and author Julie Shipley-Strickland on Credit Canada’s latest Moolala episode about personal finance for singles. 

We’ll walk through some of that episode’s themes, stats on singles’ expenses, and tips to manage your money effectively while single.

Why are Finances Different for Singles Versus Couples?

In 1987, 1.7 million Canadians lived alone. In 2022? 4.4 million people. Singles are one of the fastest-growing segments of the population in Canada. 

But they’re not all the same. 

In her book, The Canadian Guide to Personal Finances for Singles, Julie Shipley-Strickland and co-author Bryan Borzykowski explore finances for three categories of single people: 

• Divorced
• Bereaved
• Chosen single

Of course, each experience comes with its own challenges. A divorcee might struggle with emotional and financial complications. A bereaved person struggles with grief, along with the responsibility of “handling affairs.” And for those who choose to be single? They might be single parents, dealing with debt, or navigating any number of life’s other challenges. 

What do all these singles have in common? Julie elaborates on the simultaneous financial freedom and stress that come with being alone: 

“They don’t have to have any discussions [about what they spend money on], but they also don’t get to have any discussions with a partner, or someone to bounce ideas off of. It’s hard — [they’re] always in your own mind when making these [financial] decisions.”

In other words?

“I have no one to rely on. If I don’t figure this out, no one is going to take care of it for me.”

Plus, any sort of financial planning becomes a solo endeavour. Tax planning, retirement planning, estate planning — Julie highlights that all those things become very reliant on a single person. 

So that’s the emotional and safety-net side of things. 

Now, let’s talk numbers. Here’s what single people spend more on compared to coupled people:

Housing

Let’s start with rent. The general rule is that you shouldn’t put more than 30% of your income toward rent. In Toronto, you’d need at least $3,000 a month to cover the average cost of rent — does that sound like 30% of your income? For the average person, that’s closer to over half their income. 

If you’re splitting that with a partner, you’re in that 30% threshold. But if you’re paying this on your own, rent is pushing up to 50% of your income, based on the average $70,000 salary in Toronto. 

Furthermore, you will have a more challenging journey toward homeownership. You have a single income for lenders to consider versus a double income, making mortgage approval more difficult. Why? Because a single income might not pass the stress test lenders put on mortgage applicants for approval. 

And once you secure a mortgage, you’re covering costs like utilities, maintenance, insurance, interest, and mortgage principal all by yourself. 

Of course, not every single person opts to live solo. Unfortunately, that’s not feasible for many of us given inflation and rising costs — roommate situations are becoming more common out of necessity (more on that later). 

Retirement planning

Single people are relying on themselves either planning for or during retirement because they don’t have a partner’s pension or assets to lean on. Julie will typically recommend having more cash (liquid assets) to survive through retirement. 

This might look like making more cash deposits throughout their life, or insurance: 

“Some of my clients enjoy the idea of having insurance in place, with cash value. And that cash value is there ‘if they live too long,’ if they’re running out of their traditional retirement assets, they have this next access to a pool of cash they could rely on.”

But insurance is yet another cost you’ll have to cover solo. 

Food

Bulk Barn and Costco might be practical for a couple or small family – but a single person isn’t as likely to experience the savings of bulk buying. That’s a big reason why food becomes much more expensive for them. 

If only it were as easy as buying smaller portions. 

But traditional grocery store packaging doesn’t proportionately consider smaller amounts in pricing. The bigger carton of milk is always a tad cheaper per ounce, but it’d probably go bad before being any more valuable to a single person.

3 Finance Tips for Singles

Here are a few ways to prepare for your financial future as a single person. 

1. Plan your meals

One Dalhousie food study indicated a 5-7% price increase for food —  and that number is expected to be higher for Ontario, British Columbia, Alberta, and Newfoundland and Labrador. 

Unfortunately, singles will feel that price increases more prominently due to the lack of proportion in food packaging or, for single parents, the added financial responsibility of feeding more people on a single income. Others may be more likely to go out for more lunches and dinners to socialize with friends versus having nights at home with a spouse. 

Prepping your meals will help you avoid overspending at the grocery store and save costs from eating out. 

2. Be open-minded

Julie’s greatest piece of advice for singles is to be open-minded. For example, unconventional housing. You might not imagine a future with roommates past university — yet Julie’s financial research showed that shared accommodations in older age was well received for its sense of instant community. 

“Large home, several bedrooms, adjoining bathrooms renovated, all people living in the home [would] have it jointly with a private room and share a common space. The idea of a group home – they want camaraderie and community without all the responsibilities of a home on one person. Maybe someone handles cleaning, outdoor work, laundry — whatever the arrangement is — there are several being set up across Canada.”

3. Maintain liquid assets in your portfolio and a solid emergency fund

When inflation diminishes our cash value, it’s easy to put all our money into investments like equities and real estate. But as a single person, you shouldn’t overextend yourself even with investments. 

Say you experience a layoff like so many of us did during the COVID-19 pandemic. If you were married or lived with a partner, you could lean on your spouse’s income temporarily. 

But if you were single? And all your money was tied up in RRSPs or a house?

A strict budget wouldn’t have been enough for you to make your rent and other obligations. You would have needed a solid emergency fund to get you through it. Or you might have lost serious value by forcing a withdrawal or sale. 

The same mentality applies to a single person’s retirement. 

“We need a bit more liquid money to access because you don’t have that second person’s pension to lean on,” said Julie. “So you need more liquid assets available.”

Regular contributions to a high-interest savings account should be a minimum for every single person — at least 20% of your income. 

Free Credit Counselling for Singles with Credit Canada

Whether it’s handling debt or fixing up a monthly budget, you don’t have to go through every financial decision solo. 

Credit Canada’s certified credit counsellors offer free, non-judgmental counselling sessions to help singles assess money management plans and debt relief options. 

Sign up for credit counselling today!