Saving Tips for Singles

Cut Down on Entertainment

One of the biggest expenses of single life is entertainment. You probably don’t enjoy sitting at home by yourself every night, so that means you’re far more likely to meet up with friends for dinner, grab drinks or catch a movie on the weekend, and otherwise spend a lot of time being social. Unfortunately, most of these things don’t come cheap. Dining out frequently can quickly drain your budget and hitting the bar or club on the weekends can cost an arm and a leg. So, moderation in these areas will be key to saving money.

This doesn’t mean you need to cut out all of your fun social activities. Instead, you’ll just want to take stock and determine how much you’re spending and where that money goes. Once you see how much you’re spending on food, drink, and entertainment, you can probably identify some areas of potential savings.

For example, let’s say you’re going out to dinner five nights a week and each time you’re spending 25 dollars. That’s $125 a week, or $500 a month. Just on having dinner! If this is the case, consider cutting back one or two nights a week by eating at home, or by simply grabbing a cheap bite somewhere. Even if you make this small change it could result in an extra $100 in your wallet every month.

Start an Emergency Fund

After you’ve taken a look at your budget and have identified some areas to cut back, what should you do with the money you’re saving? The first thing you should do is take a look at your emergency fund, if you have one.

If you don’t have one, now is the time to start. Having money in the bank that’s set aside for a financial emergency is the first step in building a sound financial foundation. Without this cash cushion you’re bound to resort to credit cards or loans in the event of a financial crisis, which only makes the situation worse. So, if you’re able to save a few bucks by cutting back in other areas, start by making sure you’re putting some of that money into your emergency fund.

Pay Down Debt

You’ll also want to use any savings you’ve realized to tackle high-interest debt. If you’re carrying a balance on a credit card that’s charging something in the neighborhood of 12-29% interest, one of the best things you can do with that money is to pay it down. Even if it’s only an extra 25 dollars on each monthly payment, you’ll shave years off of the repayment term and save hundreds or even thousands in interest.

Don’t Neglect Retirement

Finally, don’t neglect retirement. This one is the most difficult for young singles because retirement is the last thing on your mind. Retirement might be forty years down the road and you haven’t even thought about what you want to do next week, let alone four decades from now. But not thinking about it now is a big mistake.

Time can either be your greatest asset or your biggest enemy. The earlier you begin saving, the less you actually have to save because compound interest over time does the work for you. If you wait just ten years before starting to save for retirement you could end up having a nest egg that’s only half as big as if you had started earlier. So just because you’re single and retirement may feel like it’s half a century away, make sure you’re putting at least something into your work’s 401k or into your own IRA. You’ll thank me later.

And you can bet that if Uncle Sam does come calling (is Uncle Sam single? I don’t know) he’s not riding in on a white horse dressed in shining armor. Odds are, he’ll be dressed in a stiff suit banging on a computer while you hold your breath wondering if you fabulous new black boots could be considered a business deduction.

I have to cop to the fact that I’m married, but I’m here to stand up for the singles’ crew and offer some tax saving tips you should be taking advantage of if you’re not already.

Your House: If you own it, your swinging bachelor (or bachelorette) pad is tax deductible. Singles can deduct mortgage interest and property taxes just like your annoying married friends. Home ownership is great for your tax bill (and for your love life IMO) – it can slash your tax burden significantly because every penny you spend on paying interest on your mortgage can be deducted.

Your Retirement: I know, I know. You’re too hip and single to be worried about being 65. Wake up, people! Time to start saving for retirement so you can reap the tax benefits. Your 401K contributions reduce your taxes owed and can help get you a bigger refund. You can even sock away money in a qualified IRA up until April 15 if your employer doesn’t offer a 401K plan.

Your paycheck: It’s like giving yourself a raise. The odds are pretty good that you’re having too much tax taken out of your paycheck every payday. The evidence is clear if you have a big refund coming. Almost 80 percent of taxpayers get a refund. In 2009, the average refund topped $2,700. Filing a new W-4 form with your employer (your HR department will have it) will insure that you get more of your money when you earn it.

Your education: Investing in you is always a smart idea (and only makes you more attractive to the opposite sex). If you’re paying your own tuition for a graduate course or other training, you may qualify for a Lifetime Learning Credit that’s worth 20% of up to $10,000 of qualifying expenses.

Your job hunt: It’s tough out there and finding a new job in today’s economy is no easy thing. But as long as you’re looking for a new gig in the same line of work, you can deduct job-hunting costs (resumes, recruiter, even phone bills), including travel expenses such as the cost of food, lodging and transportation, if you have to head out of town.

Your move: Congrats! Your job hunt (see above) was a success. Now you can cash in on your moving expenses. If the new job is at least 50 miles farther from your old home than your old job was, you can deduct the cost of the move, even if you don’t itemize expenses. If it’s your first job, the mileage test is met if the new job is at least 50 miles away from your old home.

Your good deeds: So what if you couldn’t get a date on Saturday night. Go out and help someone less fortunate than you and you’ll be able to deduct expenses related to your charitable work such as mileage to deliver meals to the elderly, expenses related to being a scout leader or going to a charitable organization’s regional meeting as their representative.

Your (gulp!) marriage: Say it isn’t so! If you’re giving up the single life and getting hitched, before the wedding, get together with your soon-to-be ball and chain and both your W-4 forms and figure how to arrange withholding from your paychecks to match your new tax status.

So…a little advice from this married tax blogger. Single is fabulous! Enjoy every minute of it, no matter how long it lasts. And please don’t complain about married people getting a better deal on their taxes. Believe me, we have to have something to get excited about.