The benefits of marriage / co-habitating are well-known: shared living costs, combined incomes, improved health in the long term, and so on. I love my partner and we got married about a year ago (for non-financial reasons 😛 ) But as an exercise, I decided to estimate how our finances have changed after marriage. It turns out that in our case, there are severe financial penalties to getting married. I had vaguely known about before, but it was kind of shocking to see the hard numbers as I wrote this post. Here we go.
Financial disadvantages of marriage
- Taxes: Getting married bumps us up to a higher tax bracket. This is because the tax bracket for a married couple in the US is not 2x that of singles (Financial Samurai explains it better than I can). Luckily, this is a one-time cost because the new 2018 tax brackets mostly eliminate the marriage tax penalty. The bad thing is, we could’ve saved by delaying our marriage by a mere 6 months, but we didn’t know that federal taxes were going to change like that. Cost: -$6500, one time. (Calculated in TurboTax by comparing single + single VS married. The amount is actually a lot less than the predictions from Financial Samurai – I’m not sure why.)
- The wedding: I’ll have to do a more detailed post about this, but our wedding cost about $26k, despite our best efforts. Part of the reason was that we had it in the Bay Area, where prices are super inflated, to make it more convenient for our friends. We debated for a while whether to even have a wedding, but eventually decided to go ahead to basically satisfy our families. Luckily, we had the savings for this. Cost: -$26k, one time.
- Jobs: Although we dated long-distance for 5 years :o, we couldn’t imagine having a long-distance marriage too. We definitely needed to have jobs in the same city. However, as a faculty at a research university, it’s pretty hard for me to change jobs because there are usually only a handful of applicable openings nationwide. Happily, my partner has been very supportive of my career goals, and is leaving his job to come work in my city. However, he’s leaving the Bay Area, where the salaries are enormous, and taking a huge pay cut. Cost: I can’t even bear to write it. Let’s just say on the order of six figures.
Financial savings from marriage
So is everything doom and gloom? Well, there are obviously financial advantages to getting married and co-habitating. Let’s roughly count those up too:
- Food: My partner often eats out, while I usually cook. Now that he’s started eating my home-cooked food, we’ll save on his restaurant habits, but spend more on groceries. It’s hard to say how this will balance out. A back-of-the-envelope estimate: assuming he used to eat out once per day, that’s costs $10/day * 360 days/year = $3600. Our grocery bill will increase too, so let’s round down. Savings: $3k/year.
- Housing: I own (mortgage) my condo, while my partner has been renting in the pricy Bay area. He’ll eliminate his rental costs, great! Savings: $24k/year.
- Car: Each of us has our car right now, so we’ll sell one of them. Our cars are both circa 2005, so the value of selling it won’t be much, but the reduction in yearly insurance/fees/maintenance costs will be the main savings. Savings: $2000 one time + $1000/year.
- Pet boarding: I travel a few times a year for work, so I previously had to find a pet sitter while I was gone. Now my partner can watch her. Savings: $500/year.
So… yeah. The savings are WAY less than the costs. Getting married had some negative financial repercussions, and I’m pretty grumpy about that! There were large one-time costs in terms of taxes and the wedding, and my partner had to take a huge pay cut to move to be near me. While the former costs were somewhat avoidable, the latter would definitely be avoidable were I willing to give up my career goals and move to his area and work in industry. I guess my career dreams come at a significant financial cost, both to myself and to my partner This is something that I feel very guilty about, even although my partner completely supports me.
It was our decision to get married, and we would do it again no matter what. But it’s quite depressing to lay down the numbers! There are a lot of challenges as a dual-career couple, but the big one in our case was that one person (my partner) had to sacrifice his career/salary to enable the family to stay together. Sometimes I wish we were in the situation that I see most of my colleagues in, where one spouse doesn’t work or has a more geographically-mobile job. It’s hard to trade off income for family – although family is clearly more important, obviously we would prefer to have the best of both worlds. It’s tough to see the real dollar cost of trading one for the other.
Have you or your partner ever taken a pay cut to be together? How did your finances change after moving in or marriage?