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Why Marriage Makes Financial Sense

If you have a significant other who believes that getting married is more a financial liability than a benefit, the mindset is more common than you would think. Many people, largely confused by the long held belief married couples pay more in taxes than those who are single, have held on to that line of thinking as a reason to avoid tying the knot. Not only is it untrue, there are other reasons why marriage makes financial sense.

Tax Penalty
According to MSN, prior to 2001 more than half of married couples paid less in taxes than if they filed separately, but the couples paying more in taxes after getting married were the working poor. If the couple made $10,000 each over the course of the year, the earned income credit, a credit designed to keep the working poor out of poverty is often less for dual income households. Because of this, Congress closed the marriage penalty allowing married couples to make more money without taking on the penalty. Although the legislation is set to expire at the end of 2012, Congress is not expected to allow it to return.

Health Insurance
Possibly the largest financial benefit of getting married is health insurance. If one person works full time and has access to company sponsored health insurance, he or she can add his or her husband or wife to the policy for an additional cost. If he or she isn't married, his or her spouse would have to acquire health insurance from a different source.

Auto Insurance
By pooling insurance needs, insurance costs go down. Multi-policy discounts and the lower price that comes with being married are just a few of the insurance benefits. According to Insure.com, a 23 year old living in Indianapolis, Indiana could see as much as a 26% drop in his or her annual premium when he or she applies for coverage as a married couple. Other discounts include multi-car policies and bundling homeowners insurance with auto insurance.

Financial Protection
We don't get married for financial protection, but marriage provides that advantage. The fallout from divorce is real and after a court divides the assets, each party is often left with roughly half of the marital assets. When two people live together, the legal procedure to divide assets isn't as clear. Courts have ruled in most states that divorce law doesn't apply to unmarried couples.

This means that contract law will apply in dividing up the assets, which means that a spouse has no inherent right to any of the other person's assets that may have been purchased using combined funds. The exception to this rule is the handful of states that allow common law marriage, but it's a myth that living together for a certain period of time becomes a common law marriage with all the rights of a traditional marriage.

Better Loans
Two incomes are better than one. If you apply for a $150,000 house as a single adult, you may only have your own income for the bank to consider. As a married couple, your combined income will allow you to qualify for a larger loan with better terms assuming that your credit scores are reasonable.

Credit
If your credit score has taken some hits as of late, marrying somebody with a better score gives your credit score an instant boost. Of course the opposite happens, too. Your spouse's credit score may be negatively impacted by your lower score, but as a couple you may be in a better financial position to get on a path to financial recovery.

The Bottom Line
If your spouse is using finances as a reason not to marry you, this argument doesn't fare well against the facts. Getting married and staying married for the long-term brings with the opportunity for more financial security providing each of you practice good family financial rules. Don't spend more than you have and limit or eliminate the use of credit cards.



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