Wedded, Wealthy, and Wise

Previously I've written on the impact of marriage on net worth and how marrying for money actually works. Here's another take, this time from Yahoo, on the financial benefits of being married. We'll start with the facts and conclusions from a recent study :

According to the report, which was published in the Journal of Sociology, people who married and stayed married showed a sharp wealth expansion after they wed, growing to an average of about $43,000 by the 10th year. For single people, assets grew from less than $2,000 at the start of the survey to about $11,000 by the 15th year.

Those who divorced saw their wealth shrink by 77 percent -- a larger decline than would occur by simply splitting a couple's assets in half.

"You lose economies of scale in divorce -- you need two places to live, two cars," Zagorsky explains. "Divorce is quite expensive, paying for lawyers and court fees. Divorce is also time-consuming. It may take time away from work, which also reduces many people's incomes." In addition, divorce weakens the incentive to work harder in the future, particularly if a percentage of income is garnished to pay alimony.

"For the majority of people, wealth tends to be built up from savings, and savings is the difference between income and expenses," Zagorsky notes. People who live together spend less and save more. For instance, the Bureau of Labor Statistics tracks actual spending in its Consumer Expenditure Survey. It found that while a single person spends $25,423, a two-person family spent $45,855 -- only 1.8 times the amount.

Now it gets interesting. The author adds her own thoughts:

But it's not just cheaper housing and utilities. After 13 years of marriage, I have developed my own 'scientific' theories of rising wealth among the married.

• First, the "I-no-longer-have-to-impress-her/him" factor
• The "no-longer-on-the-prowl" factor also helps
• Finally, the "we're married-we're boring" factor

Ha! These are funny, but when you think about them, they're true too.

Any interesting stories out there about money and marriage? Feel free to share them with us all in the comments section below.

Comments

[Chris]

I'm curious about the effects on your credit score if you were to close your personal checking account and open up a joint account with your spouse. I recently was married and we were thinking of merging our bank accounts into one, but haven't yet because we weren't sure how it would effect our credit scores.

[claire]

Good post, but since you don't talk about tax advantages (and social security advantages in case one spouse dies) I don't see anything in this discussion that would actually change our finances if my partner and I were to get married. We own a house together (and therefore save on not having two dwellings), and take advantage of every other possible "economy of scale"--one car, one set of furniture, etc. Our finances are partially combined--we have some separate savings but mostly share all earnings and expenses. And of course, we share the biggest expense either of us has ever had: our son.

I wish that discussions of the married and unmarried state would include a third category for people like us. We are not married and have no plans to get married, but I don't consider myself single either.

[FMF]

Here's a comment from Justin whose work firewall wouldn't let him post a comment, so he emailed his comment to me:

"My wife and I use three checking accounts. We have a joint checking account for bills and such and separate accounts for our personal spending. The way we work our system is to calculate our total expenses from several months worth of data to come up with a budget number (this includes the 10% of our income we put into savings post-401(k) and the 10% of our income that we tithe). This budget number ($136 for example) is then compared to our income to derive a percentage (68%). Then out of each of our paychecks we contribute 68% of our income to the joint account. The benefits of this system are that I am able to buy gifts for my wife without her seeing anything in a checkbook register. It also saves confusion because there is only one joint check book and it is always in the same place (in the bill box) so we avoid the "Honey, where's the check book?" scenario. Granted this approach will not work for everyone, but it has been wildly successful for my wife and I for over 5 years."

[Margo]

I'm with Claire - what's the impact of 'shacked up, not married'? Would their net worth increase as quickly as the married group? Or would it be a bit lower, possibly from the "mine and his" attitude that is (theoretically) less present among those who chose to commit to marriage?

[mysticaltyger]

I don't know for sure...but I'd say those in the "shacked up" but not married category are more prone to breaking up (Statistically, that's just a fact). I suppose those who manage to stay together for more than 10 years would have most of the advantages married people have. Still seems like a good idea to me to get married, if only for the financial/legal benefits (Social Security benefits if you've been married 10 years or longer, hospital visitation, and probably a whole bunch of other things as well).

[Deborah]

I laughed at the "I-no-longer-have-to-impress-her/him" factor. Actually, the spending to impress has never impressed me, but rather made me think one was foolish with their money management.