Few events in your life are as impactful and important as marriage. This is because when you tie the knot, then you vow to spend the rest of your life with your “special someone” and share your good and bad days with them as long as you both are alive. The new relationship also has a huge impact on your finances. The following points shed light on that aspect:
Insurance
Source: investopedia
Insurance comes in various forms viz. health insurance, term insurance, car insurance, etc. which are also some of the covers that you must have whether you are single or married. However, when you are married, then you also need to think about other insurance products like ring insurance about which you can read here.
Here is some good news- married couples have to pay less for home insurance and auto insurance compared to singles. This is because couples can take joint policies rather than two separate policies for a single cover. However, there is a downside- you may not qualify for the Affordable Care Act subsidies that grant health cover.
Taxes
Source: Maddin Hauser
When you are married, then you get two options for filing taxes which are:
- Married Filing Separately (MFS)
- Married Filing Jointly (MFJ)
Both options come with their advantages and drawbacks, although most married couples choose the second option to save more money (whopping 95% of couples, to be precise). That said, there are disadvantages of filing jointly that you need to know. For starters, a phenomenon called “marriage penalty” may come into effect if one partner falls under a higher income bracket and the other under a lower income bracket. In a situation like this, the incomes are averaged together in a way that the person with a lower income is pulled up into a higher income bracket and the one with the higher income is brought down into a lower income bracket.
Credit
Source: Jack Frog/Shutterstock
Debt is also something that becomes complicated when two people wed, even if they are together due to sheer love. In fact, bad credit can be a deal-breaker for a marriage proposal.
Since you share many important things with your spouse, including home, car, business, etc. you may feel inclined to take loans with them as well. This, however, isn’t recommended to everyone- if your spouse has a low credit score, then taking a loan with them can have an adverse impact on yours if they are unable to repay the debt. That said, there are many advantages of joint loans.
One of the biggest advantages of joint loans is attractive interest rates and easy approvals. This has to do with the fact that there is a lower risk on the lender’s end when there are two applicants instead of one.
Property
Source: Rentberry
It’s not uncommon for married couples to buy properties together. It makes sense. However, it’s not without risks.
A lot of times, couples take joint loans for real estate, not knowing that they would separate in the future. What happens in this situation is that dividing the property in question becomes a huge challenge. If the loan is yet to be repaid, then resolution becomes even trickier. This is why it’s recommended that you think long and hard before you decide to invest in real estate with your spouse.
Conclusion
Marriage is easily one of the most beautiful events that you will experience in life. However, it can also create problems if you aren’t careful. As far as finances are concerned, you will benefit from remembering the information that’s shared above. Always remember- you can’t be too careful.
