Does it make financial sense to get married?

Monday, 10 December 2018

If you're in synch, being coupled can pay off.

For most people, getting into a relationship isn't a financial decision.

But a review of the Property (Relationships) Act has brought questions about what a marriage or de facto relationship can do to your finances to the fore again.

So does being part of a couple help or hinder your bank balance? We look at the arguments for, and against.

FOR

Generally, it's easier for a couple to get by because they can share costs.

* 'Toxic triangle': the surprising third wheel in your relationship

* Top tips to help stop money ruining your relationship**

Splitting up tends to be financially harder on women.

If you're both working, and you share a house, you hopefully have extra income that can be used to split everything from your insurance bill to your supermarket shopping - and generally these are not twice as expensive for a couple as they are for a single person.

Banks look more favourably on a mortgage application from a couple with combined income than they do on an application from a single person.

Life is also much easier for coupled retirees - the single living alone pension is $400.85 but a couple gets $308.36 each.

Financial coach Hannah McQueen, of EnableMe, said when a couple was financially aligned and had complementary goals and financial habits, working together would create economies of scale.

'Provided you are in a good relationship, fully aligned with where you are now, have clarity on where you want to be and a strategy you both buy into – then you are better together, financially speaking.'

(Just don't borrow money for a wedding.)

There are also some benefits that perhaps aren't benefits for everyone.

Married men tend to earn more. Whether that's because they have support at home to allow them to focus on work, or just that the kind of people who earn more are more likely to be married, is up for debate.

The bad news is that doesn't apply for women. Research shows the biggest gender pay gap is between married men with children and married women with children - the men in that case earned 4.6 per cent more, according to PayScale.

The smallest gap was between single women and men without kids at 0.6 per cent. One study argued this could be because single women couldn't afford to be less productive at work and earn less.

Go figure.

AGAINST

If you're in a relationship with someone and it doesn't work out, you could end up picking up a bigger bill to support them, since government benefits often take a partner's income into account when assessing whether someone is eligible for support.

And if you're not well aligned like McQueen suggests, it is possible for a couple to undo each other's success.

'One of the benefits of being single, is that you are responsible for your own financial future and your efforts will directly impact this. There is no back-up plan, or man on a white horse – you are in the box seat,' McQueen said.

'What we find in these situations is that it's 'game on' for the single person – and knowing that they have one shot to get things right motivates them to be more purposeful, try harder – and get to where they want to be, with or without a partner.'

Financial adviser Liz Koh said a couple where one partner did not manage their money well, or had a different attitude towards risk and return or different goals, could have a negative impact.

'For me personally, I am single and like to be independent, making my own financial decisions. Women on their own have to take charge of their finances and learn skills around managing and investing money, whereas in a relationship it's easy to just rely on the other person to take care of everything. So it can be a good thing to be single, to learn how to manage money and be free to make one's own financial decisions.'

If you come into a relationship with assets, at the moment it's possible for a new partner to take half of virtually everything after three years. The Law Commission has recommended that be amended so that only the increase in value of the family home should be split, if it was owned by one half of the couple before the relationship began.

Women are left disproportionately worse-off when a relationship disintegrates.

AUT research into parents' outcomes after a divorce found, in almost half of the separations, the man gained financially, after taking into account the change in their family size, while their ex-partner was worse off. In a quarter of cases both were worse off.

So just stay single, ladies.

Or don't. Because there's no hold-fast advice that works when it comes to relationships. It's always a bit of a gamble. Try to tilt the odds in your favour by picking a good one, then hope for the best.