Many individuals avoid discussing marriage and money in the same breath but in reality, the discussion— or lack thereof—of finances is one of the primary reasons why couples decide to call it quits. What a lot of individuals who tie the knot often do not understand until too late in the marriage is the fact that it is often money matters that lead to a lot of arguments. When not handled properly or left unresolved, financial issues often lead to divorce.
Yes, we do not go into marriage thinking that it will end in the big D word. We all want it to last forever. But we also have to face the reality that the specter of divorce looms in many unions. The best thing to do would be to learn from those who have gone before and try not to go that same path if it can be helped. For many marriages, the breakdown is often precipitated by a lack of communication about money and debt. If you are open with each other about things like the family budget, savings, debts, and the little luxuries that you want to buy for yourself, you set the stage for an honest relationship.
Aside from love, marriage offers a host of financial benefits that make a great incentive for couples to stay together through thick and thin. So before we discuss how divorce impacts your finances in more detail, let’s examine the financial advantages that come with tying the knot. These make a practical case for staying together and working through the rough spots that inevitably come with it.
Better financial stability. The most obvious benefit that comes with marriage is that there are already two of you working instead of one. Your earning power is increased. Even if one of you decides to stay home when the kids come later on, the other is still available to earn for the family and you get to save on major expenses like childcare. Moreover, having a partner to work for the family means that you still have a little leeway in case you suffer a daunting setback, like getting fired from your job.
When you treat two incomes as one, you have the leeway to allocate funds for certain financial goals that you both share. You have money to save for that house downpayment, that vacation, or your future plan to go back to college or pursue graduate studies.
The opportunity to combine—and lessen— expenses. When you are married, you naturally share one roof, the same cable, phone, and Internet subscriptions, and utility bills. Food expenses may likely be the same as you will still most probably be eating the same when you were still living separately. But for the other expenses mentioned, there is that opportunity to lessen your expenses. This will mean savings for you—money which you could invest or put in a nest egg for your retirement.
Better loan offers. When there are two incomes, lenders are more likely to grant favorable loan offers because you are naturally in a better position to pay off your debts than if there was only one breadwinner applying for a loan. If your spouse has a stellar credit score and yours is just so-so, you could both benefit by getting more competitive interest rates.
On the not-so-bright-side of things, your credit rating could get affected if spouse has a very bad credit history and low credit score. This is why you should always ask to see each other’s credit records before you tie the knot and have candid discussions about these issues so that you are both not caught off guard when applying for loans as a married couple.
Savings on car insurance. If you and your spouse are responsible drivers, you get to save on car insurance. Inform your insurance agent that you are getting hitched and you will benefit from lower rates. Moreover, you can consolidate policies and even insure your car and your home with the same insurance company to get discounts.
A word of caution, however: If your spouse is an irresponsible driver, you could end up with higher premiums if you put him or her on your policy. Be sure to read the terms and conditions carefully and weigh the pros and cons together if consolidating policies is going to result in savings or if you’re better off keeping separate insurances.
Access to your spouse’s employer-sponsored health plans. Employers often give generous benefit plans to their employees. Most plans include coverage to spouses and kids as well. Marriage is one of the events that will allow you to gain access to your spouse’s health plans. This is considered a major financial plus to those who are currently purchasing their own health insurance policy which can really be expensive. If you are also covered by a health plan from your own employer, you should decide if it is more financially-beneficial for you to be covered under your spouse’s employer-sponsored plan or to keep your own.
Check out www.adamscapgroup.com for more Information on How to Manage Your Debt.
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