The Marriage Decision Matrix: Is Staying Single Better for Your Finances?

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You know you’re in love and you know you want to spend your life with your partner — but does getting married help your finances, or leave them worse off? Before you walk down the aisle and commit to each other “for richer or for poorer,” make sure you understand the financial ramifications of your nuptials. That knowledge will help you set out on a “for richer” journey together.

The Financial Pros of Getting Married

In addition to commitment and a beautiful ceremony, marriage carries economic incentives as well. Major benefits of marriage include:

  • Joint health insurance: If one of you has a great health insurance policy through an employer and the other doesn’t, getting married might be the easiest way to ensure both of you are covered. Not all employers allow adding a domestic partner to your health insurance policy.
  • A bigger home: Assuming both you and your future spouse are employed, applying for a mortgage together will increase your chance of getting approved for a larger amount (and, consequently, enable you to buy a bigger home). Of course, bigger won’t necessarily be better if you overextend yourselves. The same applies to renting a home: your landlord will take both incomes into consideration, but make sure you’re not spending more than you can afford.
  • Death benefits: The IRS generally does not tax spousal inheritance, except in the case of the very wealthy. Further, you might receive benefits such as Social Security and pension, which are generally not available to unmarried couples.

The Financial Cons of Getting Married

Some potentially serious financial problems arise when you walk down the aisle. Considering the ramifications before you get married is essential for planning the best financial future for you and your spouse.

  • Money management: If partner has trouble managing money wisely, trouble can ensue for both.
  • The marriage penalty:  Simply put, because one spouse’s income will be tacked on top of the other for tax purposes, their whole income will fall within higher tax brackets compared with each of you filing single. However, higher deduction limits largely offset the marriage penalty, so it shouldn’t be a major concern. If in doubt, you can always discuss the details with an accountant or run joint vs single filing scenarios through your tax preparation software.
  • Liability: Financial judgments on joint accounts affect both spouses. If your partner goes bankrupt or doesn’t pay bills on joint accounts, you can be held financially liable.

The Financial Pros of Staying Single

Other than being able to go out every night without answering to anyone, staying single has financial benefits, just like getting married.

  • Control: While married couples don’t have to merge their finances, many do – and then regret it, should the marriage turn into a divorce statistic. Single individuals, or even couples who live together without being married, generally have and retain full control of their financial and credit lives.
  • Career focus: When you get married, the marriage becomes the primary focus of your life – especially once children come into the picture. Staying single, even when you’re dating seriously or cohabitating, allows you a little more leeway to concentrate on your professional life.

The Financial Cons of Staying Single

The final thing to consider when thinking about the financial side of getting married are the financial problems related to staying on your own.

  • Retirement planning: Forbes.com reports that single individuals generally put off retirement planning into their 40s. Married couples tend to start saving earlier, making retirement easier and potentially more lucrative.
  • Higher per-person cost of living: To state the obvious, single individuals (who live alone) pay a higher percentage of their income for basic necessities, including food, phones and cable television.
  • The marriage penalty: The marriage penalty cuts both ways. Single filers pay, on average, 35% of their income to the IRS, as opposed to just 29% for married couples. (Keep in mind, those averages include couples where only one spouse works, which may explain the lower average tax rate.)

Making Married Life Financially Sound

All told, though, have you ever heard of anyone who decided to not get married because it’s financially imprudent? Hardly.

When it comes to love and finances, it’s less about knowing the cons of being married and more about finding the best way to handle your finances as a married couple. Some ways to ensure a sound financial and romantic union include:

  • Put all your financial information — good and bad — on the table. This allows for a frank, in-depth discussion of the issues raised above.
  • Create a budget together. This allows you and your future spouse to compare income with expenditures and plan for your financial future.
  • Create a plan to pay off outstanding bills and get out of debt.

It might be the last thing on your mind when you’re planning your wedding, but trust us: at the end of the day, examining the financial consequences of marriage are more important than finding the perfect color linens for your wedding reception.

Image: Andrew Morrell, Flickr

Nicholas Pell
Nicholas Pell is a freelance personal finance writer based out of Hollywood, California. In addition to Credit Sesame, he also writes for Mint Life, Wise Bread and Business Insider, specializing in showing people how to live large on a modest budget and get out of debt. He has also reported extensively on the mortgage crisis, student debt bubble and health care in the United States. Pell lives a stone’s throw from the final resting place of Cecil B. DeMille.

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