The monetary magic of marriage
Conn Carroll
It is generally known that married people are wealthier than single people. But as the number of cohabiting couples rises, where do they fit in on the wealth spectrum?
Not much wealthier than single people, it turns out. According to data from the Federal Reserve of St. Louis, married couples between the ages of 25 and 34 have a median net worth of $68,210. For cohabitating couples, it is $17,372, and for those who are single, it is $7,341.
So when a single person moves in with someone, their wealth barely rises at all — from $7,000 to about $8,500. But the average single person who marries sees his or her wealth grow from around $7,000 to $35,000.
Why the big marriage premium? Some of the bonus stems from the demographic profile of married people. Married people are, on average, better educated and make more money than single people. But that isn’t the whole story.
To be extremely unromantic, think about two business partners that never create a single bank account for their new business, never develop a plan about how their business will grow, and make everyday decisions based on the assumption that their business partner could suddenly abandon the business at any time for any reason.
Compare that venture with two business partners who create a shared bank account, develop a plan for how their business will grow, and sign a contract that binds them to work together somewhat permanently. Which of those two businesses would you expect to be more financially successful in 10 years? The married couple, of course.
“Married people may be much more likely to have these conversations around what goals they have for their financial future,” Cornell University marketing professor Emily Garbinsky told the Wall Street Journal. “There seems to be something very special and unique about deciding to share finances.”
Wealth is by far not the only reason to get married. Some, like this author, would argue it is not the most important reason by far (married people have more and better sex than single people). That said, if financial security is a top priority of yours, tying the knot is definitely the right choice for you.