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Should You Get Married? Financial Factors To Keep In Mind

Should You Get Married? Financial Factors To Keep In Mind
Steve Gillman Sep 13, 2017
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Is marriage necessary or obsolete? According to surveys done by the Pew Research Center most people don’t agree with the statement, “Society is better off if people make marriage and having children a priority.”

Apart from questions of social value, there are personal and legal considerations. For example, to be in this country with the love of my life I had to marry her. It was the most practical and legal way for her to stay here, because she’s from Ecuador.

But if your partner is from the same country you can co-habituate for life without government permission in the form of a marriage license. And we’re well past the time when getting married was the only socially acceptable way to be with the one you love.

Then there is the option of simply staying single. You don’t have to live with someone else, whether married or not.

Should you marry, live with a partner, or stay single? If you don’t have strong personal beliefs that steer you one way or the other, financial considerations can play a big role in your decision. So here are some of the financial advantages of being single, being together with another person, and being married.

Seven Financial Advantages of Single Life

Science Shows Single People Die Younger,” headlines read. But Bella DePaulo challenges this assertion on, pointing out that the original research does not make a strong case. In any case, whatever disadvantages single life may have, there are certainly some benefits too. Here are some of the financial advantages.

1. All Money Decisions Are Yours Alone

When you live with a partner large purchases or expenditures have to be discussed and agreed upon. This is true even if you keep separate accounts and split the bills.

For example, she might prefer a $600-per-month apartment so she’ll have more money for other things, while you might want a nice place that costs $1,000 per month. What do you do? If she agrees to the better place is it fair for her to pay half?

What about furniture? Who gets to decide what to buy? How will the cost be shared?

When you’re single every financial decision is simplified because you don’t have to argue about it or even discuss it. If you have the money and you want to buy something, the decision is made.

2. You Don’t Have to Pay Anyone Else’s Debts

In many states you’re liable for the debts of your spouse. In other words, if your spouse runs up $30,000 in credit card debt, you may have to pay it. This is true of debts incurred from lawsuits too, meaning if your spouse is sued, you might pay.

You’ll never run into these problems if you remain single.

3. You Can Keep Your Health Insurance

We don’t know what kind of system we’ll have in the future, but at the moment you can lose health care subsidies if you marry. Combining incomes can sometimes make your “household income” too high to qualify, even if your own income previously qualified you for help paying for that insurance.

4. You Can Pay Less for Housing

Splitting the rent or mortgage payment often reduces the individual cost of housing, but not always. If you’re a bit of a non-conformist you might get by for less if you stay single, because you have more options.

For example, you can rent a bedroom, which can sometimes cost less than half of what you would pay for an apartment for two people. You might get by rent-free by house sitting, and it’s easier for a single person to get those jobs. The bottom line is that you can choose any of the cheap housing options that work for you, without needing agreement from anyone.

5. You Might Pay a Lower Tax Rate

You may have heard of the “marriage penalty” in relation to income taxes. Whether you pay a penalty or get a net benefit depends largely on income level. Generally, high-income earners are more likely to face a tax penalty if they get married.

In other words, this “advantage” depends on individual circumstances. You have to gather the relevant information and do the math to see if you pay a lower rate as a single person.

6. Your Credit Score Is All That Matters

Getting married won’t lower your credit score, at least not directly. But when you marry or live with someone your partner’s score can affect your finances.

The obvious example is mortgage rates; if you buy a home together the lower of the two scores can make for a higher interest rate.

This could also be a problem in other areas where you’re jointly liable. Credit scores are looked at by potential landlords and by insurance companies, for example.

When you’re single your credit score is the only one that counts.

7. Bankruptcy is Simpler

Of course you hope it never happens, but if you do have to declare bankruptcy, it’s much simpler when you’re single. You can file for individual bankruptcy even when married, but in many states your spouse’s assets will still be considered yours.

Unmarried couples also face complications when one partner files for bankruptcy. Income your partner makes can prevent a court from giving you bankruptcy protection.

When you’re single it’s simpler. And, of course, simpler means cheaper if you’re using the services of an attorney.

Seven Financial Advantages of Living With a Partner

There are several key advantages to having a partner in life. Three of them overlap with the advantages of the single life, and we’ll start with those…

1. No Joint Liability

Except when you buy things together.

2. You Can Keep Your Health Insurance

Combined incomes won’t cause the loss of health insurance subsidies unless you marry.

3. You Might Pay a Lower Tax Rate

You file as an individual, so you avoid any potential marriage penalty.

4. You Can Pool Your Assets

Some things may require more money than you or your partner have individually. A down payment on a house is a good example, but you might also pool your capital to start a business together.

And sometimes your assets may be in different forms, but complement each other. One partner might already own a home the two of you can live in, while the other has investments that produce income, which brings us to our next advantage of partnering…

5. You Can Pool Your Incomes

Money Magazine reports that “One in four couples between the ages of 18 and 34 bought a house together before they were married…” It makes sense. You and your partner might not qualify for a mortgage with your individual incomes.

In any case, when pooled for mortgage purposes, your the larger total income allows you to look at pricier homes, if that’s what you want.

6. Housing Might Cost Less

You do have more housing options when single, including cheap options couples can’t take advantage of, but if you want a basic apartment or house, the individual cost per-person will normally be less when you share.

7. Other Expenses Can Be Reduced

The efficiencies of living together go beyond splitting a mortgage or rent payment. There are many other things for which one-per-couple might be enough, instead of one-per-person, and that means cutting costs in half.

This includes most furniture — you only need one couch or kitchen table for two people. Then there are washing machines, refrigerators, televisions, and more. You might even get by with one car once you move in together, a strategy that can save you a lot of money.

Eight Financial Advantages of Marriage

Five of the advantages of living together also come with marriage, so we’ll list those first, Then we’ll look at the three distinct advantages that only come with marriage.

1. You Might Pay a Lower Tax Rate

Again, this depends on your circumstances, but not all married couples face a marriage penalty at tax time. In fact, if one of you isn’t working or collecting other income, the two of you will generally pay less in total taxes than your combined total as individual filers, thanks to the doubling of personal exemptions and standard deductions.

2. You Can Pool Your Assets

The same as unmarried couples.

3. You Can Pool Your Incomes

The same as unmarried couples.

4. Housing Might Cost Less

The same as unmarried couples.

5. Other Expenses Can Be Reduced

The same as unmarried couples.

6. You Get Social Security Benefits

Interestingly social security discriminates against single people. While every worker pays the same percentage on their wages, single workers get only a retirement benefit. Meanwhile, if you’re married, your spouse can get a survivor benefit if you die.

Of course, the reverse is true too; you can get a survivor benefit if your spouse dies (depending on your age and the benefit rate of the deceased). Assuming you’ve both paid into the system, when you marry you basically give each other an additional benefit.

7. You May Get Insurance Benefits

The rules for unmarried “domestic partners” are changing, but there are still insurance-related advantages to marrying. For example, some companies extend employee health insurance benefit only to married partners. Workman’s compensation death benefits may also be available to a partner only if married.

8. You Get Inheritance Benefits

If you’re unmarried you can try to plan well for your death so your partner gets everything you want to pass on. But can you perfectly plan an estate that, while you’re alive, is in constant flux, with assets coming and going, and rising and falling in value? Writing a new will every few months seems impractical.

It’s something to consider since there are essentially no inheritance rights for unmarried partners. When you’re married you can be sure that, unless you specify otherwise or your will is challenged in court, your assets will go to your spouse upon death, and vice-versa.

A Final Word on Marriage and Money

Should you marry or not? That’s not something anyone can answer for you. But don’t dismiss the financial considerations too quickly.

Imagine if your husband is sued over a business matter, and you lose everything just when he was supposed to start expensive life-saving treatments for some illness. If you were not married you could have preserved half or more of the assets the two of you owned, and so be able to care for your partner.

Or consider what happens is you live with your unmarried partner all of your life and, when you die, he or she can’t make it alone without going back to work in old age. If you were married your partner might have received Social Security survivor benefits.

Of course, as a single person you might avoid all the problems of joint liability or face all the problems of handling everything alone.

Stay single, live as an unmarried couple, or get married? There isn’t an easy answer that works for everyone, but it makes sense to consider the financial factors.

If you know of some other advantages for singles, unmarried and married couples, share them with us, and keep on frugaling!

Steve Gillman

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