Weddings and official announcements may not be for everyone, but the money-related perks of marriage — from joint income taxes to health insurance coverage — can often be what pushes some couples toward an official union. What many people don't realize, though, is that there are some real financial benefits to not getting married, too.
More and more millennial couples are choosing to skip tying the knot, with the number of people in domestic partnerships having risen by almost 30 percent in the last decade, according to the Pew Research Center. Additionally, many of those who are deciding to get married are doing so later than previous generations, a delay due partly to financial reasons, says Kathleen Howe-Hrach, senior wealth planning consultant at BMO Wealth Management. Couples with student loan debt, changing careers, or other big expenses often "feel they should put their own financial ‘houses’ in order before a marriage commitment," she explains.
So while it used to be that only married couples could get all the financial perks, that's no longer the case. If you're putting off getting hitched for a few more years or are planning on forgoing marriage entirely, here's how staying unmarried can actually help you and your partner make money.
You can save by avoiding a lavish wedding
A 2018 study found that the average American wedding costs $33,931; it's become so expensive that some couples are taking out loans with interest rates of over 30 percent to pay for their weddings, according to The Washington Post.
Couples who skip the nuptials, however, “avoid large costs and even debt associated with a large wedding,” says Howe-Hrach. Even more, if you take the money that you would have otherwise spent on a ceremony and party and instead invest it in investment bonds, mutual funds, or dividend-paying stocks, you might see major long-term rewards in the form of compounded interest.
You can avoid the cost of divorce
While a study from the University of Maryland found that the national divorce rate has dropped by 18 percent over the last decade, Time reports that married couples' chances of getting divorced are still high, at 39 percent. And although breaking up can be incredibly painful no matter your relationship status, the financial burden associated with divorce can make an awful situation even more financially challenging. On average, divorce costs $15,500, according to a survey from legal database Nolo, which amounts to nearly a third of the national annual mean wage of $51,960.
Of course, you’re not doomed for divorce if you choose to tie the knot, but if you stay unmarried, you’ll be able to avoid divorce fees, pocket the extra cash, and watch it grow in dividends.
You can build your credit together
Back in the '70s, the Equal Credit Opportunity Act outlawed credit discrimination for unmarried people, so now, any person can apply for a credit card or loan regardless of their marital status. If you want to take out a mortgage loan on a house for you and your partner or obtain a credit card with perks you both use, you can absolutely do so whether or not you're married, says Howe-Hrach.
And if you have a good credit score but your partner does not, you don't have to disclose that when applying for credit. Even more, you can add your partner as an authorized user on your credit card to help them strengthen their credit score. “If you’re someone who always pays their credit card bill on time and keeps their credit balances low, this positive behavior can be reported on your authorized user’s credit reports,” explains Oliver Browne, industry analyst at Credit Card Insider.
You can get on each other's health insurance plans
Health insurance is one of the most significant expenses for Americans; according to a recent report from the Centers for Medicare and Medicaid Services, the average citizen spends $10,739 on health care per year, not including out-of-pocket expenses for things like large medical bills. Some people think getting married is the only way for uninsured people to get insurance, but many companies offer plans that cover domestic partners, too.
According to Howe-Hrach, to qualify for a partner's insurance plan, unmarried couples are typically asked to certify that they're in a close exclusive relationship, that they've lived together for at least six months and plan to do so indefinitely, that they're not married to anyone else nor blood-related, and that they both share basic living expenses.
But if you or your partner's workplace doesn't cover domestic partners under its health insurance plan, don't sweat it just yet. According to the Society for Human Resource Management, many large-scale, competitive employers are constantly looking to offer more inclusive benefits packages to attract and retain quality candidates. As such, it could be worth trying to negotiate for domestic partnerships to be added into the insurance plan at your next performance review, or schedule an appointment with HR to discuss the situation.
You can designate each other as a living trust
Thinking about mortality isn’t the most romantic thing in the world, but you can find solace in knowing that your partner will be financially secure once you’re no longer there, and vice versa. According to Howe-Hrach, all long-term couples — but especially those who aren't married — should discuss what they'd do money-wise in the event that a partner falls ill or passes away unexpectedly.
“Unmarried couples should establish a will and living trust to ensure assets will pass to their significant other and not per state law, which would mean assets pass to your surviving family members,” she advises. Additionally, in the event of incapacity, make sure you’ve designated your significant other with a power of attorney so they can make financial decisions for you. In your will, you can also name your partner as the main beneficiary of your life insurance policy and retirement accounts.
You can spend on your own terms
Not all married couples join bank accounts, but it is a common practice, while unmarried couples more often keep their finances separate. If you have different spending habits than your partner, keeping your own bank account can mean that "you don’t have to negotiate or compromise with another individual on how, when, where and why to spend your money. Your money is yours and you have 100 percent control over it,” says Howe-Hrach.
While practicing financial autonomy is a great idea if you’re savvier about money than your partner, you can reap double the rewards if you also communicate your spending habits with them, perhaps inspiring them to follow the same guidelines. “Discussing topics such as income, credit scores, and debt with your partner can both help you get a better picture of each other financial situations, helping you plan better for the future,” explains Browne.
Not getting married doesn’t mean you don't still get to save up and enjoy the financial benefits of having a life together. With thorough planning and open communication, you and your partner can easily position yourselves for a lucrative future, no matter your relationship status.
