Couples who are married not only earn more and save more money but they are far better at managing their money than their peers who haven’t tied the knot. Then for some strange reason, couples are also decidedly better at building wealth when married, than if they are just merely cohabiting. This is something that more and more research is backing up: couples who just live together somehow never seem to reap the same kind of benefits that their married counterparts do.
A number of reasons have been put forward by researchers who study wealth trends, particularly in relation to marital status, as to why a couple’s financial future is suddenly brighter after signing the dotted lines. And come of the reasons these experts in the field highlight as being responsible for why walking down the aisle seems to open the door to greater wealth and prosperity include:
1.Partners who have tied the knot are typically richer than their unmarried peers is that they are more likely to have assets (homes, retirement savings, investments, money in the bank, and so on). For instance, when you take homeownership (one of the biggest indicators of wealth) you find that it is married folks that hold the larger concentration of housing wealth. So says data from the St. Louis Federal Reserve Bank.
As of 2019, the median net worth for cohabiting couples aged 25 to 34 was $17,372, a quarter that of the $68,210 for married couples of that same age range, according to data from the Federal Reserve Bank of St. Louis. For singles, it was $7,341. –Source
2.Research also indicates that the “long-term mindset” which is typical of those who get hitched turns out to be a powerful driver of wealth. Their unmarried peers who, even if cohabiting, may still not be fully committed to the idea of staying together forever and so are less likely to combine their finances and investments.
The long-term, goal-oriented mindset, however, enables married couples to not only pool their money and enjoy economies of scale but also to combine their investments for greater returns.
“Working with two incomes and combining their investments to maximize compound interest can significantly increase a couple’s financial prospects.” –Emily Garbinsky, associate professor of marketing at Cornell University.
3.According to W. Bradford Wilcox, professor of sociology at the University of Virginia, married couples now also seem to have the inside track when you look at who’s getting married these days. He says, “it’s more educated, more affluent and also more religious Americans that tend to get married in the first place.” They, therefore, enjoy a head start over their unmarried peers.
Education has been found to be a factor when you consider the distribution of wealth across the marital divide because you find that married, college-educated have twice as much wealth as those who are divorced or never married.“We’re already saving a lot of money and splitting the cost on most things,” she said. “I don’t understand how married couples are accumulating wealth in a way we’re not doing.” –Melissa Mowery, 30, Asheville, N.C.
4.In relation to a single’s household, Pamela Smock, director of the Population Studies Center, the University of Michigan, says a couple’s ability to divide their responsibilities in financially beneficial ways is another advantage they enjoy. She says, for example, “a married man may be able to work 12 hours a day to please his bosses and get promoted because he and his wife can divide household duties so he can get ahead.”
There’s a catch!
You have to stay married to stay on that path to the greater wealth and prosperity that stable marriages provide so divorce means taking a detour off that road. It is well known that divorce tends to take a big financial toll on the divorcees going forward. This usually results in falling into debt and requiring financial assistance from family and friends or having to dispose of assets to just keep their heads above water.
Women are usually seen to suffer more in divorce depending on factors like their earning power before the event, and whether their ex makes good on post-divorce financial obligations, if any. As for men, they also experience a significant drop in their standard of living for the same reasons. I have seen people not only end up being saddled with a ton of money in credit card debt but also forfeiting large chunks of their paychecks to exes.
On average, stably married men and women have more than $640,000 in assets, while the remarried have more than $450,000 in assets. By contrast, divorced and never married Americans have only about $167,000 in assets when they reach preretirement years. –Source
Other things worthy of mention about the effect of divorce on a couple’s financial standing include, it is expensive due to legal and other associated costs, it can also take a big toll on assets, savings including 401(k)s can take a hit and former partners can still end up owing money after all is said and done.
So getting married may mean making more, saving more and building the kind of wealth that is the envy of your unmarried peers but should one get divorced, let’s just say, the opposite happens.
Takeaways:
- Married couples are typically richer than unmarried couples because in addition to having a combined income, they are more likely to combine investments.
- The “long-term mindset” which is typical of those who get hitched turns out to be a powerful driver of wealth.
- The status of intending spouses prior to tying the knot (earning power, savings, assets, level of education and so on) have a great bearing on their future financial prospects as a couple.
- Married couples hold the larger concentration of housing wealth which is one of the strongest indicators of wealth.
- Getting divorced begins to reverse the trend of building and maintaining wealth normally enjoyed by people in stable marriages.
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This post was previously published on medium.com.
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Photo credit: Dieter Blom on Unsplash
