The Real Cost of Marriage

Contrary to popular belief, marriage is not just about the cost of the wedding, checks that pile up at the reception, or the envelopes filled with cash. There’s more to it. When we speak of marriage, countless decisions – from minor to life-altering – need to be made. Whether that’s related to your first long-term investment, a major health crisis, your child’s education, or the accumulation of retirement funds, the list of to-dos and mutual goals for a married couple, especially those who have been in a long-term relationship, are endless. The act of getting married, other than just living together, can have immediate effects on your financial situation – for good or worse. Below, take a look at the rundown of financial considerations that come along with marriage.

The cost of marriage: Key financial considerations

1.Family health insurance plans

The result of being married can influence something as basic and yet critical as a health insurance plan. If you are married for a few years now, it’s likely you and your spouse may either have individual health policies or a plan that provides more coverage to both partners. However, if you have plans to expand your family in near future, it’s wise to opt for a family floater policy. Such plans enable you to add your spouse and other dependent family members, such as children or elderly parents and are considered safe investment options by finance experts. As this is a long-term investment, you may want to compare plans of different insurance companies and then sign up for a better deal.

2.Family tax planning

Tax planning can be tedious, but it becomes easier when you and your partner do it together and share the load. Married couples can take on the task of family tax planning and leverage tax benefits as well. Depending on your respective tax situations, you and your partner may owe less (or get better returns) filing as a couple when compared to what you would if you filed separately. This arises when a couple has a huge difference in their income levels. Conversely, a couple with similar incomes can end up paying more in taxes if they file a joint return. You and your partner can still choose to file your taxes separately if you are concerned about tax penalties, but as you may notice, this step involves a bit of a balancing act. So, it’s wise to talk to your tax consultant to see which option is best and how you can lower the tax burden. The fact that the best credits and tax breaks for married couples are only available when filed jointly cannot be underestimated.

3.Real estate investments

Being married won’t directly qualify you for a more desirable mortgage. Both partners’ respective incomes, credit scores, and debt loads are still considered. However, where being married makes a difference is in terms of flexibility and that’s the essence when you are trying to apply for a larger home loan or better mortgage rate. On the flip side, when you become a guarantor with your spouse on existing credit obligations, like a home loan, you become responsible for their debt. This, in turn, impacts your credit if you decide to jointly apply for a home loan, which demands disclosure of your marital status. Finance experts recommend skipping this route unless both the partners have nearly equal credit scores. Doing so will ensure you maintain your good credit even after “tying the knot”, and that your bad credit won’t affect your spouse’s score and report and vice versa.

4.Joint retirement planning

National Pension Scheme (NPS), as well as government-backed Employees’ Provident Fund (EPF), are great ways to set yourself (and your partner) up for financial security later in life. These investment options allow you to grow your money and create wealth for retirement. Essentially, investing in something like NPS means establishing a future income for yourself. In cases of a single earning member, one partner can open a new NPS account in the name of their partner, which is an excellent way for couples to plan ahead and share their retirement income. Single, non-working individuals do not have this option. If you max out your EPF and NPS, you and your partner can analyze the next steps with a certified wealth manager. They can help you with good investment plans – which could be taxable but yet contribute towards your retirement income.

How can you budget all of this?

As a couple and family, you will most likely incur an endless list of expenses throughout your lifetime. Before you go all out planning for the years ahead, align your expenses in order of priority. What’s a bigger priority for you and your partner? The upcoming trip? Your kid’s college fees? The down payment of your vacation home? Or the renewal of the life insurance policy? What are the two of you willing to give up to ensure you can save up to pay for your top priorities? In the end, it all boils down to budgeting! The only way you will be able to do this is by determining which expenses take a back seat and which ones are non-negotiable. Remember, your spending must align with your joint income, risk-taking capability, regular expenses, and long-term personal finance goals. Having a reliable wealth management company like Dezerv to guide you along the way will help you stay on track to fulfill your commitments and eliminate the fear that couples can experience when discussing major money matters.