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Money and Marriage: The Top 5 Financial Pros & Cons of Getting Married

By Myles Leva

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Last Updated: January 16, 2023

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Marriage isn’t just about love. Hopefully, it should include love. However, it’s also a binding legal and financial agreement between two people. The financial implications of money and marriage are many. Some of the implications are generally beneficial, while others may not be.

In this article, we will cover the 5 pros and cons of money and marriage.

We’ll keep everything centered around the money itself; what you save, what you lose.

 

 

What are the financial advantages and disadvantages of being married?

The financial advantages of marriage mainly stem from the opportunities that open up.

Marriage may open you up to receiving benefits or access to financial resources that you could otherwise not access. Then, when the actual relationship works well, it provides accountability and stability to your financial life.

In terms of negatives, there are some situations where you may lose out. You may be liable for higher taxes; or not. Of course, if your relationship doesn’t end up working out, the financial consequences could be severe.

Let’s look at all these issues.

 

 

Financial Advantages of Being Married

One: Possibly lower taxes overall

In many cases, marrying and filing jointly can save you a lot of money in taxes. However, this is usually the case when children are involved.

Marriage enables both partners to share some deductions, especially those for children and mortgage payments. In many cases, this means you pay less than you otherwise would.

 

Two: Health insurance plans

In some ways, marriage enables one partner to benefit from the coverage of the other.

Sometimes, one partner does not have access to a group health insurance plan. They may be unemployed, taking care of children full-time, or otherwise locked out. In many cases, the uncovered partner can benefit from the employer-sponsored plan of the other.

Often, the covered partner must pay a fee for adding their spouse to the policy. However, this is normally less expensive than any alternative. Buying an individual policy off the market, while not working full-time, isn’t normally a prudent decision, financially, when this alternative is available.

 

Three: No estate tax

Estate planning is made much easier and more affordable when you are married. Married couples can inherit their deceased partner’s wealth without federal estate taxes. If the amount to be transferred is more than $12.06 million (2022), the federal estate tax would normally kick in.

For people with amounts of wealth above that amount, the estate tax can be costly, possibly as much as 40%. Exact amounts vary by state, as state inheritance tax is separate.

 

Four: Retirement saving

Normally, you must be producing income to contribute to an IRA. Married couples can make contributions for one another, however.

This is useful if one partner is working and the other is engaged in childcare, for example. Spousal IRAs enable a working spouse to make contributions on behalf of their partner.

That means in cases where one parent takes time off to take care of dependents, or when one simply loses their job, their retirement savings process can continue.

 

Five: Legal protections in death

Estate planning is always very important, even if you’re married. But if you’re unmarried, you have no legal advantages or ability to claim your partner’s assets.

This is a major reason why if you’re serious about staying together for a lifetime, especially if you plan on caring for children, marriage is important. Given those two circumstances, marriage offers many protections for familial wealth.

If you’re married and don’t have a will, intestacy laws, which are governed at the state level, will determine how your assets are distributed when you die.

Put simply, society provides fail safes for married couples, especially in death and estate planning.

 

 

Financial Disadvantages of Being Married

One: Divorce

We’re sorry to ruin the romance after so much talk of lifetimes of love and caring for children…

…But financially speaking, few singular events are as potentially costly as divorce.

In some ways, we could include this on the list of advantages as well. One spouse may be required to pay spousal support or alimony to the other. This is a financial positive if you’re on the receiving end. But if you’re the one paying your former spouse, you are very likely to see it as a huge negative.

In addition, more emotionally charged divorces can be ugly processes where much money is spent on legal fees. This can be a big financial negative for one or both sides. It is often less of a problem with amicable divorces, but we can’t provide more detail than that.

Every divorce is as unique as every marriage when it comes to the emotional side of it. Financially, prenuptial agreements aren’t always as clear-cut as you would think, so the high, unpredictable costs of divorce must be at the top of the list.

Then there are possible related expenses like moving, all of which can add up.

 

Two: “Marriage tax”

Yes, there are some tax benefits to marriage… possibly. But the terms “marriage tax” and “marriage penalty” exist to describe situations where the result is actually higher taxes.

This is a more common case when both spouses are in higher income brackets. If filing jointly, you may push each other into higher income brackets, triggering much larger tax burdens than if you were single.

It is very much worth considering the balance between higher income tax obligations and potential benefits. In some cases, marriage will be kinder to your finances. But if you and your spouse both have high incomes and few opportunities for benefits and deductions, you may lose out.

 

Three: Money stress

Okay, this isn’t purely a numbers-driven issue. However, money is near the top of the list of causes of stress and fighting in marriage. That YouGov poll is one such example; other polls place money right at the top.

Financial stress is a big problem already, even if you are single. In marriage, two peoples’ ideas, habits, and values regarding money can conflict, multiplying the stress.

This is a bigger problem when values and habits are very different:

  • One is a spender, one is a saver
  • One has great credit; one is in debt and has a very low credit score
  • What one sees as “frugal” the other sees as “cheap”

 

Four: Shared debt

Similar to the above point, if you’re married, in many ways, their debt is your debt.

Credit card debt, student loan debt, gambling debt, and anything else you can imagine now affects you both. This is one of the biggest causes of money-related arguments and divorces.

 

Five: Familial expectations

This is another possibility, it won’t always matter.

Once you tie the knot, people who were once just friends, perhaps even just complete strangers, are now in-laws. That means family, oftentimes, in many ways. That also means that they may be able to add financial stress or direct financial pressure to your marriage.

Imagine the many possibilities…

His brother needs money for rent. Her parents need money for car maintenance. His spoiled cousins want a vacation to Disneyland. Oops, her brother lost his job, too.

The possibilities are endless, really. And why shouldn’t they be? After all, you’re married, right? You both have jobs, right? You’ve entered a stable social and financial situation, right? Don’t you know that people like you should always look out for less fortunate family members?

Now, this may seem very cynical. Ideally, it is. But this is another factor that varies greatly, and we cannot neglect our readers by not throwing out some small dose of cynicism that may save you money.

Besides, the entire point of a “disadvantages” or “cons” section of a financial article on marriage should have a healthy dose of cynicism in it. This is money talk, after all.

 

 

Money and Marriage: Conclusions

Marriage should be about love, not money. Most healthy people agree with that.

What we hope you can take away is that while love is love, when it comes to marriage, the financial aspects cannot be completely ignored. They will catch up with you, for better or worse, at some point. For that reason, the main things to consider when entering marriage is that your financial habits are:

  1. More important, as more responsibilities are likely to come into play
  2. Shared with someone else, who may or may not click with you when it comes to financial values

These are all considerations worth talking about with your potential spouse.

Photo by Natasha Fernandez

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