What Saying "I Do" Means For Your Wallet

Illustrated by Elliot Salazar.
By Farnoosh Torabi

History tells us that marriage was primarily used for economic reasons — a bride was "given away" by her family in addition to some form of dowry or a groom's family would "buy" a bride from her own, with the hopes that she'd not only bear children, but take on the role of the housewife, as well. If a deep and loving connection formed over time — that was just a bonus.

Over the years, marriage has evolved into a consensual union of two people who are in love above all else. Let's not pretend that marriage no longer has economic implications, though. There's a laundry list of financial pros and cons that come with tying the knot instead of living the single life or continuing as partners without a contract from City Hall. Consider the following before you take your bride or groom to be — they're definitely worth a second look.
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Illustrated by Elliot Salazar.
“The biggest advantage after saying ‘I do’ is that your earnings typically go up and your expenses go down,” says Stacy Francis, founder and CEO of Francis Financial, a wealth management boutique in New York. “This leads to married couples accumulating more assets than their non-married counterparts.”

This, of course, assumes that there are two incomes to join. If that’s your current situation, then you may benefit from a “more beefed up balance sheet,” says Francis. This can help couples better qualify for a mortgage or a business loan than if they apply as individuals.

At least one study has shown that marriage has a more positive impact on wealth creation than staying single. Researchers at Ohio State University found that married people experience individual net worth increases of 77% over singles in their 20s, 30s, and early 40s. Married couples also see their wealth jump by 16% for each year of marriage. Not a bad deal.
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Illustrated by Elliot Salazar.
A big wedding may not be your style, but even the cost of the reception, gown, tux, flowers, honeymoon, and more certainly add up. This can be a huge reason that couples choose to put marriage off.

City Hall isn't exactly everyone's dream venue for getting hitched and some couples are looking to save up to afford the wedding of their dreams. Given recent figures, it could definitely take a while. Wedding website The Knot completed its annual survey and found that the average wedding in the U.S. costs more than $31,000 (which is also a down payment on a nice home — just sayin’). Yikes.
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Illustrated by Elliot Salazar.
When you officially become a married couple, pressure to get your personal financial situation squared away can bottle up.“It’s one thing to ignore your finances when you are the only one being hurt — it’s a whole other thing to be putting in jeopardy the financial future of the one you love most,” says Manisha Thakor, director of wealth strategies for women at Buckingham and the BAM Alliance.

This is actually a good thing, though. The union often encourages more consciousness around how you’re spending and saving. “The very commitment of getting married often creates a mindset of wanting to care for and protect the other person, which in turn can catapult financial well-being to a front-burner topic,” adds Thakor.
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Illustrated by Elliot Salazar.
What’s also true, unfortunately, is that money is one of the leading causes of fighting in a marriage and a top predictor of divorce. That’s partly because we tend to marry our financial opposite, according to at least one academic study. And because of that, financial planning can become a bigger source of stress in matrimony.

“Problems are likely to arise when realistic spending boundaries are not set,” says Francis. “One person is a spender and another is a saver. One spouse has an awful credit score and the other has worked for years to keep theirs over 800. These are all difference that can create marital woes.”
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Illustrated by Elliot Salazar.
You didn't think we'd skip the "marriage penalty," did you? It’s that higher tax bill that sometimes arrives when dual-income married couples file jointly with the IRS, as opposed to filing as two separate individuals. The pooled incomes tend to bump up couples to a higher tax bracket, which sometimes makes them subject to paying more, says Ebong Eka, a certified public accountant in the Washington, D.C. area.

Couples facing the greatest marriage penalty are those who have relatively similar income levels and are at either end of the income spectrum — earning very little or a lot. In fact, the New York Times reported earlier this year that those who earn the same amount of money tend to face the highest penalty. These married couples are estimated to hand over about $700 more in taxes than if they filed as two single people.

Pro: ...Or Not

In some cases though, being married can yield a tax “bonus,” where couples pay fewer taxes as a result of their wedded status. This is true for couples with one working spouse and one stay-at-home spouse. According to TurboTax’s website, “The more unequal two spouses' incomes, the more likely that combining them on a joint return will pull some of the higher-earner's income into a lower bracket. That's when the marriage bonus occurs.”
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Illustrated by Elliot Salazar.
To invest in an individual retirement account or IRA, you typically need to have earned income. There is an exception for married people. A spousal IRA is designed to let a working spouse make contributions on behalf of a non-working husband or wife. So, if you choose to be a stay-at-home parent during your marriage or you lose your job, you can still stay active with retirement savings.
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Illustrated by Elliot Salazar.
If you don’t have access to a group health insurance plan, you may be able to take advantage of a spouse’s employer-sponsored health care. Many of these group plans allow spouses to be added to the policy and receive equal access to health care benefits. There may be an additional fee for adding a spouse, but it’s often cheaper than buying an individual policy directly from the marketplace.

Additionally, as a legally married individual, you can also qualify for spousal Social Security benefits. You can claim benefits once your spouse has filed for his or her own benefits and is at least 62 years old, according to Jon Robertson, a certified financial planner with Abacus Planning Group in Columbia, South Carolina. Spousal benefits are generally 50% of the full Social Security benefit if the spouse files at his or her “full retirement age” (generally 66 or 67, depending on when you were born).

“You are eligible for spousal benefits even if you have never worked,” says Robertson. “This can be a huge win for a spouse who had a low income or who did not pay enough into Social Security to be eligible based on his or her own earnings.”
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Illustrated by Elliot Salazar.
Estate planning is crucial in every marriage, but if your spouse suddenly passes away without a will, as the surviving spouse, your state’s intestacy laws may still let you to claim certain assets that, say, were solely owned by your spouse. “Our society has some built-in protections for married couples,” says Robertson. “If you aren’t married, the rules of intestacy will not apply and you will inherit no money unless your partner has a will directing assets to you.”

Next: The Money Talk Every Couple Should Have
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