Is it more expensive to be single?

The financial tradeoffs between singles & couples

hether you’re single or in relationship, the financial grass may look greener from the other side. In this article, I examine the tradeoffs of both scenarios. Tl;dr? Singles shouldn’t feel too bad, and couples shouldn’t feel too smug.

I never felt more single than in Argentina, 2017. “There will be wine,” they said. “You will be the only single guy on these wine tours,” they didn’t say. I should’ve known that Mendoza would be rife with couples.

“Happiness is only real when shared.”

There’s already the stress of being single. Is it also more expensive being single? Do couples have the financial advantage over individual?

The answer: it’s complicated.

Let’s start with some data from the 2019 BLS report. Married couples without children spend less on housing, transportation, food and apparel. Singles spend less on healthcare and personal insurance.

Couples: 1 | Singles: 0

Depending on the income level, there can be a marriage tax “bonus” or “penalty.” On average, more married couples get tax break over those filing single.

Couples: 2 | Singles: 0

This is sometimes referred to as singlism — the discrimination against individuals based on marital status.

It’s not all gloom and doom for singles, and the picture’s not all rosy for couples either. Let’s zoom out and examined the real life tradeoffs of being single vs in a relationship.

Economies of scale meets preferences

My girlfriend and I feel so clever when we share a Venti instead of ordering two smaller drinks at Starbucks. “Economies of scale,” we say in unison, as we skip into the sunset sipping our latte.

To reach economies of scale efficiently, you’ll need similar, complementary preferences.

Imagine the couple with wildly different preferences: one eats keto and the other will take carbs to their grave. There’s no overlap for cost savings; both will continue to spend at the same rate.

There’s a continuum between preferences and economies of scale. I eat meat and my girlfriend’s vegetarian; we save some money by sharing non-meat foods. Call it economies of kale.

The more similar the preferences, the better economies of scale.

Most couples probably land somewhere in the middle, and it’s possible that some are under-optimized:

  • Highly similar preferences but low economies of scale: do you not share? Someone’s hiding the chocolate.
  • No overlap in preferences and low economies of scale: you’re either rich and love each other for wildly different choices, or you’re fucked.
  • High economies of scale but low preference overlap: one of you is taking it for the team and/or miserable.

Hidden costs in relationships

While couples have easier access to cost sharing, their savings may be negated by a hidden cost: spending more because of each other.

A 2015 study found that 7 in 10 Americans say they spend more money in relationships compared to when they’re single. (Interestingly enough, this vastly more the case for men versus for women. Maybe more people should try splitting the bill.)

Couples: 2 | Singles: 1

Here’s another hidden expense: being incentivized to spend on things you don’t need, because you can split the cost.

Markets have been taking advantage of our cognitive biases for ages. We see something on sale for 50% off (anchoring effect). We don’t want to lose out on a good deal (loss aversion). The result: we end up with two bags of dessert-dry pretzels that we’ll never eat (priceless).

Being in a relationship means that many costs are effectively half off, but couples must resist buying stuff they normally wouldn’t get anyway.

Trading freedom for resources

Coupling up means gaining 1 new partner to share your life, resources, and finances with.

What happens when you start adding more people?

I once visited an intentional community in Toronto. Fine, let’s call it a hippie house. There were 8 people living there, give or take, with a revolving door. The house was vegan, banned plastic bags, practiced composting, and had a long (and specific) chore list. The obvious reason to be there was low rent and similar values.

I observed two drawbacks to this setup. The more (literal) cooks in the kitchen, the more members had to plan ahead, communicate, and negotiate with others. This is connected to another problem of personal freedom. All the house rules, quiet hours, monthly meetings, and repercussions (judgment) for stepping outside house rules means that you give up personal freedom.

You don’t have to join a commune to experience this. Couples who live with in-laws for childcare help or those who’ve moved back home to their parents’ during the pandemic have felt the strain on their individual freedom. Make your bed before you come to breakfast, honey!

This was a long way to say that adding more people to the dynamic — even if it’s going from single to couple — often comes at a tradeoff of personal freedoms. That tradeoff will feel less severe when there’s similar values.

Couples: 2 | Singles: ???

Cost sharing: not just for couples

I split Spotify with friends, meaning that I pay for unlimited audio entertainment for a couple bucks a month. My sister trades Netflix access for my Amazon Prime. I’m on a family phone plan that makes mobile data cheap.

Technology has not only driven down the costs of many goods, but also made them much easier to share.

Uber, AirBnB, and the fractionalization of assets means we don’t need to own things outright to experience them.

Say it with me: the sharing economy *sparkles*

Beyond the tech companies that support our modern lives, there’s good ol’ fashioned group sharing.

Some join community groups to barter — or give away — good and services. There are investment groups that split the cost of anything from businesses to yachts. Influencers band together to live in TikTok houses. That’s lit, fam.

Couples are essentially a network of two. Singles can mingle within broader networks and leverage them to find opportunities to make money or share costs.

Technology not only drives down costs, but makes it easier find, build, and join communities that help reach economies of scale.

Single or not, there’s no better time in history to leverage network effects.

Instability is expensive

For the sake of comparison, I’ve treated singles and couples as two static groups. But dating is dynamic — people move into and out of relationships all the time.

Trying to find a partner? Dating can cost a lot of money and time.
Trying to lose a partner? Divorces can cost a lot of money and time.

What’s truly expensive: the chaotic transition of getting in and out of relationships.

To look at it a different way, it’s stability that’s profitable, and instability that’s expensive.

There’s no better time in history to be single

Historically, it was doubly hard for the marginalized to be single.

Women didn’t get much say in getting married off or even sold to the highest bidder. Remaining single, like the singlewomen of Medieval times, was a huge economic (and social) disadvantage:

If a woman was suffering financially, she often resorted to early marriage, or remarriage if widowed

Wikipedia: Medieval Singlewomen

Before the (still recent) legalization of gay marriage, those who identify as LBGTQ were excluded from the rights that marriage confer.

Let’s not forget the racist anti-miscegenation laws that prohibited interracial marriage.

As the long tail of history whips towards overall progress, singlism weakens.

The relative ease of being single today compared to the past reflects social progress.

When the individual progresses, there is progress for all.

And that’s something to celebrate, whether you’re single or not.

This was first posted on Oz’s blog: https://ozchen.com/single-vs-couple-finances/. You can subscribe to get weekly insights about psychology + money by visiting the newsletter page below:

Writing about personal finance OzChen.com and UX Design on UXBeginner.com