There is an extra reason to celebrate love this month. National Marriage Week (February 7-14) was designated to recognize the spirit of loyalty and sacrifice that marriage represents. Another positive it represents for many folks is financial security. Some couples even take the plunge believing it will ultimately save them money. However, the formula for building financial strength is a bit more complicated than whether you have a ring on your finger.
According to a recent Pew Research Center study, just over half of U.S. adults (53 percent) 18 and older are currently married. While some of those couples have received financial advantages, whether being married saves you money will depend on a variety of factors.
Tax Perks of Being Married
Let’s start with the upsides of tying the knot. As it turns out, there are quite a few, starting with the tax benefits that single people don’t enjoy:
- Tax Deductions. The standard deduction for married couples is twice as much as the deduction for individuals. This is the amount a couple filing joint tax returns can subtract from their combined income before income tax is applied. In 2022 it is $12,950 for single filers (which includes married people filing separately). But it is $25,900 for married couples filing jointly. If only one spouse is working, this rule is like an extra financial bonus, in that the amount the couple will owe in taxes is likely to be lower than if each person files individually.
- Gift Taxes. Similarly, you can give your spouse any amount of cash, jewelry, or other valuable gift without paying taxes on it. Not so with unmarried people. Any gift of $15,000 or more is generally subject to a gift tax, in which case the giver must file a gift tax return.
- Home Sales. Just like with the tax deductions, the amount you make on the sale of a home can be twice as much for married couples before capital gains taxes kick in. Granted, this advantage applies to couples who A., were able to buy a home, and B. sell it for a substantial amount. Still, individuals who invest in property may end up paying more in taxes than their married counterparts.
Certain tax credits are higher for married joint filers, as well. But taxes are complicated. Talk to an accountant to find out if any benefits apply to you this year. When it comes to taxes, bigger numbers don’t always represent better results.
Marriage May Boost Your Retirement Benefits
Being married may give you more options in terms of retirement benefits, as well. You’ll have an advantage when it comes to collecting Social Security benefits, for example.
An Extra Person to Help Pay the Bills
It’s now more common in the U.S for couples to have lived together than to have been married. And money factors into many people’s decisions to live together, married or not. According to the same Pew study, making “financial sense” was at least one major reason for 13 percent of people who got married – and 38 percent of people who moved in together but didn’t get married.
Regardless of their reasoning, these couples had an extra person to help pay the rent or mortgage, utilities and grocery bills, provided both had a source of income. And while it’s not necessary to be married to enjoy that nice little benefit, for people who won’t cohabitate without a ring on their finger, the two things still go hand in hand.
Potential Financial Downsides of Marriage
Getting married is the right decision for many couples, but it requires serious consideration. The median cost of divorce was reportedly $7,500 in 2019. That’s no small chunk of change for someone already struggling with debt. And while couples certainly aren’t required to spend all their savings on a wedding, many do. The average cost of weddings was $19,000 in 2020, according to Business Insider – and that was lower than in previous years!
So, if you’re merely hoping to save a few bucks, there are quicker and easier ways that won’t come attached with the risks of marrying for the wrong reasons. To name a few:
- Become better at budgeting.
- Reduce your spending.
- Begin paying down your debt.
- Get a roommate to help with the rent.
Anyone can celebrate the joy of interpersonal relationships this month. Considering how often money woes weigh on marriages, smart financial management can also translate to marital health. Community Financial Service Centers (CFSCs) throughout the country offer a wide range of services that can help you keep your finances on track – from electronic bill payments to avoid late payments to prepaid debit cards to keep control of your spending.
Visit CFSC online to learn about our many convenient, time-saving services. Our efficiency ensures that basic needs are met for countless people who don’t have easy access to bank accounts. Find out more online or stop by a nearby location.