When we think of marriage, we think of wedding bells and dresses, flower girls and ring bearers, and a couple expressing their everlasting love to one another.
No party is as fun as a wedding and very few life experiences can alter your life in such a meaningful way.
I’ve written a few posts on love and relationships but I don’t think I need to remind anyone that there is a financial consequence to marriage. In fact, I think most of us consider FIRST the tangible benefits of being with a partner more than the intangible aspects like character, honesty, integrity etc.
A perfect relationship is a balance of the two. A perfect compromise of tangible and intangible benefits. I’m going to talk about the financial pitfalls and benefits that come from marriage. In this post, I’ve discussed some of the more intangible benefits. Sometimes money and relationships can mix like oil and water.
1. Sharing expenses in a relationship and couple finances:
Definitely something couples discuss when moving in together but when married, you need to take it to the next level. It goes beyond utilities, rent and groceries. It’s time to talk about retirement, spending habits, saving and buying a house.
Two people are better than one in this type of division.
To give you an example, imagine this scenario:
Jim lives on his own, he rents a $1400 one bedroom right outside of NYC. He has one car. He pays $300 between payments and insurance. Groceries cost him about $200 a month but he orders out a lot so it adds up to an additional $200. His utilities for electric and internet cable are $150. On the weekends, he likes going out to dinner/drinks with friends. His entertainment spends are around $300-$400 a month.
Jim works as a IT tech earning 75K annually or $6250 monthly. After taxes he brings home $4275.
Take home income
Net savings to go toward personal savings, 401K and Medical savings accounts.
*This is a very simplified budget but you get the picture.
Now let’s look at Jane and Sam.
They are newly married. Jane works as a teacher and makes 40K. Sam works in construction and makes 60K between hourly and overtime. They live in the same apartment building as Jim and pay 1400 for rent. Actually their spending is almost identical. They spend 600 on food, share a car for $400, $150 on utilities and spend 600 on entertainment and $600 on misc.
Together they bring in $8333, after taxes it’s an estimated $5,833.
Take home pay
Net Savings for personal savings, retirement and medical savings:
$2083 or $1041 per person.
The point of this example is that even though Jane and Sam both make less then Jim, their still able to save roughly at the same rate each because they are pooling together for their major expenses and budgeting as a couple. This is one of the best financial things to consider when either moving in or marrying. The couples budget is everything and couples who are able to leverage their joint spending will come out on top in the long run.
2. Sharing Manpower.
They say two people are better than one. And I would say that when it comes to domestic tasks, couples find that they are able to get more free time by splitting it up.
I’m not sure this is the biggest financial benefit to being married but it can definitely pinch a few pennies and save a lot of hours. Having an extra pair of hands for 1) doing laundry, 2) cleaning, 4) grocery shopping, 5) cooking meals for the week, 6) bargain shopping can add up to a lot of savings.
A single person only has so many hours available them, they have to either do these tasks themselves and lose some free time or pay a 3rd party to handle these tasks like a housekeeper, or eating out/ordering in, wash/fold services, and food delivery like FreshDirect. They can either keep their free time to themselves to do other endeavors or pay for these conveniences.
3. Spousal Employment Benefits.
One of the biggest is insurance. You can’t really quantify how important insurance is until you don’t have a job that offers it to you. Then you’re either paying hundreds out of pocket just to get simple blood work done or you’re paying $500+ premium for a private insurance for married couples that still has a large deductible or copay.
One benefit of being married is that health insurance for married couples is generally cheaper than paying health insurance for two single people.
Being able to add a spouse to your work insurance is amazing and something only allowed for immediate family members/dependents by most insurance carriers.
For my Husband and I, we’ve always had insurance that covered us through work. But there was this one year that we had to go without and that was the sketchiest year I ever went through. We never went to see the doctor because it was too expensive and we prayed neither of us were ever involved in an accident because how could we ever pay?
My job also has some married life insurance benefits that if I die, K get’s X amount and if K dies I can get X amount. It’s comforting to know that we’ll have some fall back if (God Forbid) either of us ever pass away.
1) Spending habits
Sometimes people can get so caught up in the love and the connection they have for the other person, that looking at habits like spending can seem like a non-issue.
You might look at someone who never seems to wear the same piece of clothing twice and never wonder how they can afford to such a large wardrobe.
You might see someone drive an Audi and not realize that their car payments are near $500 a month and it’s a squeeze with all their other expenses.
It’s not until YOUR money is commingled with your partner’s that you start to realize how small spending habits can add up to big expenditures.
For a long time my husband liked to play poker with his friends. He became so good his friends stopped playing with him. It was always, “maybe next time.” They were scared to lose money to him. Eventually he joined some poker clubs in the city and played there once or twice a year. Then he found some casinos near us that offered poker comps and he would go occasionally there too. He loved the game of poker but it was bleeding us $500-$1000 every time he lost.
Thankfully he doesn’t play anymore, we had a pretty serious conversation about his gambling and now I have complete control over the cash. But it just goes to show how a small insignificant habit can turn into a ravenous expense.
The same story could be told with shopping addicts or forever entrepreneurs who can never seem to get their business off the ground.
The solution is to think long range about how your finances with your partner would work and weeding out financially incompatible partners out. In my case, I nipped out early what was potentially a serious gambling addiction.
I would recommend financial planning for couples before getting married. Sometimes when things feel out of control, it’s great to consider a financial planner for financial help with married couples.
Expensive Wedding and Even More Expensive Divorces
“My husband and I, fight over money.”
People spend an average of $27,000 on a wedding. Those are pretty expensive parties. I don’t have anything against big fancy parties to celebrate the joining of a couple but when we start to look at divorce rates, those big weddings start to look like a waste. It’s estimated that nearly 40%-50% of marriages end in divorce. According to an article written by CNN, couples that spent more than $20K had a divorce rate of 1.6X more than those who spent only $5K-$10K.
In some ways marriage is a crapshoot, you can never know if some devastating skeleton is going to come out of your partner’s closet and change your whole relationship with them.
It’s when you consider that the average divorce costs $15K, marriages have a risk of being a financial hole once everything is said and done.
Then Add Children and Divorce
If your divorce included children, then there will likely be one party that pays child support. There will still be an increase in housing costs because the divorced couple will need separate places for themselves and for their children.
It can be very costly and difficult to manage your time and finances when expenses increase and resources are nearly cut in half.
Unfortunately in some cases, divorce is the only option for two people who turn out to be incompatible to stay sane and happy. But children can definitely make divorce messier and more expensive.
I’m not writing this section to make children sound like a burden but for the most part, nobody has children to make a profit. They have children for the generational and personal wealth that it brings to a family. We grow our family to keep tradition and create memories.
Nothing brings a family together like children, but nothing makes it harder to separate and divorce cheaply than children.
I would say marriage comes with a lot of different types of benefits but something we should never take our eye off of is the financial outcomes that can result from saying “I Do.” Ignoring that important fact can lead to marriage troubles over money.
On the other hand, marriage can be a blessing that can pay itself back in ways that can’t even be accounted for. For many, the risk is worth taking.
I hope you read this with hope in your heart and practicality in your mind.
Feel free to read my other relationship posts: