The article is focused on families with children, but here I am shifting it to talking about individual adults. Economists call this “economies of shared living.” But they can live for only 42 percent more than the price of one.
Yes, two can’t live for the price of one. So if you are single, your cost of living is the square root of 1 or… 1.īut if you are recently married, your cost of living is the square root of 2, or 1.414. Here’s the algorithm: The cost of living for a household is the square root of the number of people in the household. In the article The “N” Factor and Retirement Planning, Scott Burns focuses on the financial impact of having kids but also shares a interesting way to estimate how the size of a household affects how much it spends overall: However, even young professional adults can choose to boost their savings rate by embracing shared living past the college days, and families can save big money by embracing the multigenerational households that are popular in other cultures. A time-tested way to reduce your housing costs is to share a place with others, but usually we think of a bigger house as the result of a bigger nuclear family.
For most households, the biggest expense is housing.
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