December 14, 2022

Marriage and Finances

Married people have a wealth advantage over unmarried people. Married people have more wealth.

It’s interesting to learn that because in many ways, married and unmarried couples live pretty much the same lives. Yet figures show that married couples hold 4 times the wealth of unmarried couples who live together.

While there are legal and tax benefits to marriage, research suggests the financial security and long-term mindset of those who tie the knot may also be a powerful driver of wealth. Co-habiting couples are more likely to keep finances separate while married couples are much more likely to pool their money together. Once you’re hitched and made a declaration to share your lives together, sharing finances just seems like a progressive step.

And it seems the most stark difference comes from property ownership. With the property market being notoriously hard to enter for most people, ofteAnd often times that only comes after marriage

The thing about pooling your money together is that you start to think about goals more. You are more likely to have those often difficult and awkward conversations around debt, investing and financial goals. And that is bigger goals such as buying property, clearing out debt, saving and investing. I know this was definitely the case with me and my husband. First thing we did when we decided to merge our finances is set up a plan to clear any debt we had. Then we began saving up for an emergency fund and saving up for a house.

Almost 4 years later, we have no bad debt, our credit score shoot up and we saved up enough to put a deposit on our home. Would that have been a possibility were we not married? Probably not quite to the same extent.

When you share money, you think bigger. You are also much less likely to make a frivolous purchase and larger purchases are decided together. You suddenly feel a lot more accountable and focussed on growing together.

Research into the emotional aspect of holding money together has found that people feel greater relationship satisfaction once they merge their finances. I can report that this was absolutely the case for us as a couple as well. I always felt that having my own money was my security blanket. A way out if it ever came to it. So when we discussed pooling everything together it just felt right for us, It felt like we’re suddenly more committed, more involved, really in it for the long run.

I feel like a lot more conflict would arise in a relationship when two people are not sharing finances. It would feel to me like we’re not aligned, constantly bickering about what’s mine and what’s yours, who earns more and who should pick up the tab. It’s very rarely that both people in a couple will earn the same amount so unless you see finances as ours, then there will always been tension between the higher earner and the lower earner.

There are also socioeconomic factors at play here, where the higher your income the greater the likelihood that you’re married.

So merging finances has clear advantages long term but please do not jump in it lightly. Jumping in with the wrong person could cost you your home, your savings and your future. There is such a thing as financial infidelity when one person takes advantage of the joint pot.

I’d recommend you only take this step once you’re with someone you trust. Someone who you truly know inside and out, someone who is responsible, reliable and you can devote yourself and your finances to. Make sure you have an honest conversation about goals and aspirations. You don’t want to combine money with someone who wants to go and travel the world while you see yourself settling down and putting money down for a house.

My closing two thoughts on this matter are as follows:

  1. Marriage makes financial sense
  2. If you are with someone, and you don’t trust each other with each other’s money, get out of the relationship and stop wasting your time.
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