Marriage used to be merely an economic exchange. A bride was “given away” by her family along with some sort of dowry. Or a groom’s family would “buy” a bride from her folks with the hopes that she’d produce children and take on common housewifery tasks. There was little more than a financial pro and con to marriage on both sides of the familial coin. If a deep and loving connection ensued, that was just a bonus.
Thankfully, marriage has evolved to be a consensual union of two individuals who love first. But to pretend that marriage no longer has economic implications is wrong. There are several financial pros and cons of marriage. Take some cautious warning and read on.
1. Pro: A Greater Chance at Building Wealth
“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 nonmarried counterparts.”
If you’re going into a two-income household, you may benefit from a “more beefed up balance sheet,” says Francis. This can help couples better qualify for a mortgage or other loans if they apply individually.
At least one study has shown that marriage has a more positive impact on wealth creation than staying single. Jay Zagorsky, a researcher at the Ohio State University, authored the most complete research to date on the economics of marriage back in 2005. His research found that married folks experience individual net worth increases of 77 percent over singletons in their 20s, 30s, and early 40s. Married couples also see their wealth jump 16 percent for each year of marriage.
2. Con: The Wedding Could Set You Back
The cost of the reception, gowns, tuxes, flowers, honeymoon and everything in between are — combined — one big reason couples may choose to put marriage on the back burner.
A city hall wedding isn’t for everyone, and some still want to save up to afford the wedding of their dreams. Given recent figures, it could take a while. Last year, the average cost of a wedding was $30,000, according to wedding website TheKnot. Five figures is nothing to scoff about and for some, those funds could be better put to use elsewhere.
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3. Pro: More Financial Accountability
When you become a party of two, there are other financial pros and cons you may not have thought about before. You may feel more pressure to get your personal financial act together.
“It’s one thing to ignore your finances when you are the only one being hurt,” says Manisha Thakor, director of wealth strategies for women at Buckingham & The BAM Alliance. “It’s a whole other thing to be putting in jeopardy the financial future of the one you love most.”
This is a great thing, as the union often encourages more consciousness of 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.
4. Con: Additional Money Stress
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 opposites, according to at least one academic study. As a result, 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.”
READ MORE: What Happens If You Don’t Sign A Prenup?
5. Con: You May Face a Bigger Tax Burden
Ah, the infamous “marriage penalty.” It’s that higher tax bill that sometimes arrives when dual-income married couples file jointly with the IRS. The pooled incomes tend to bump couples up to a higher tax bracket. This can sometimes make them subject to paying more.
Bonus Taxes Pro: Marriage Might Help Your Finances
In other cases, marriage can yield a tax “bonus” or pay fewer taxes as a result of their marital status. This is particularly true for couples with one working spouse and one stay-at-home spouse. According to TurboTax, “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.”
6. Pro: Unemployed? You Can Still Have an IRA
To invest in an individual retirement account, or IRA, you typically need to have earned income. There is an exception, however, for married people. A spousal IRA lets a working spouse make contributions on behalf of a nonworking partner. If you choose to be a stay-at-home parent during your marriage or if you lose your job, you can still stay active with retirement savings.
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7. Pro: You Can Piggyback on Benefits
If you don’t have access to a group health insurance plan, you may be able to get on a spouse’s health care plan from work. Many of these group plans allow adding spouses 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 from the marketplace.
You may qualify for spousal Social Security benefits. You could claim benefits once your spouse filed for their own benefits and is at least 62 years old. Spousal benefits are generally 50 percent 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 (financial) 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.”
8. Pro: The Law May Protect You if Your Spouse Dies
“Our society has some built-in protections for married couples,” says to Jon Robertson, a Certified Financial Planner with Abacus Planning Group in Columbia, S.C. “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.”