Marriage is a big commitment and if you’re lucky enough to find a person, you can consider yourself very lucky.
Fortunately, there are plenty of financial perks to help you along the way. As you decide how to combine finances after you get married, keep these benefits in mind.
What’s Ahead:
A joint bank account can simplify your life
Choosing to open a joint checking or investment account can be a wise move and here’s why: joint accounts give each partner equal access to the funds, making it easier to coordinate bill payments and other costs. And if you can both track joint expenses easily, you’re more likely to have open communication about your financial life —a key ingredient in a successful partnership.
What’s more, joint bank accounts allow the surviving spouse to immediately access the money if the other spouse passes away.
If you’re looking for a bank account that offers a high APY, we recommend CIT Savings Builder. They offer two APY tiers, have free bank transfers, and do not have maintenance fees. Worth checking out, in my experience.
Read our full review of CIT Savings Builder here.
Combined incomes may lead to a better mortgage rate
Being married won’t automatically qualify you for a more enviable mortgage. Both individuals’ credit scores, incomes, and debt loads still count, and you can begin doing the math with our simple mortgage calculator.
Being married gives you more flexibility and that’s the name of the game when you’re trying to getting a better mortgage rate and/or trying to apply for a larger loan. But not always. If one of you has a poor credit rating, it’s not always advantageous to apply together. But if you do apply, lenders will generally consider the lowest middle FICO credit score for you or your spouse.
Remember that generally there are 3 credit reporting agencies that provide credit scores: Experian, Equifax, and TransUnion. And you are allowed to ask for one every 12 months and you can request them all at once or spread out the requests.
If after considering your individual credit scores, incomes and debt and you decide to still apply for a mortgage together, you’ll want to get a joint mortgage which is a mortgage that you both share together. Why? Because lenders will consider both of your incomes. Two incomes are bound to be higher than one, and the larger total income will often qualify you for a bigger loan with better repayment terms than you could get on your own.
Joint credit cards can help both spouses build credit
Here’s some unexpected good news: if one spouse has better credit than the other, the good-credit spending habits will help boost the other partner’s rating. Once you get married, your joint debts and accounts are reflected in your credit history. As you talk more about money, combine expenses, and develop a new financial lifestyle together, both of your spending habits may improve.
And if you choose to open a joint credit card, the spouse with the lower score will see their credit rise. It’s important to have an honest discussion if you choose to go this route. Who will be responsible for making monthly payments on time? What limits do you want to set about spending and borrowing money?
Another option, if you’re already getting great rewards on an individual card, is to make your spouse an authorized user rather than applying for a new card altogether.
The Chase Freedom Flex℠ is an example of a credit card that allows you to add authorized users to your card. Authorized users have the same account number and charging privileges as the primary cardmember but they are not financially responsible. And bonus – the Chase Freedom Flex℠ has no annual fee and lots of cash back incentives that make the card highly attractive.
You’ll get better rates on home and auto insurance
For insurance companies, a couple is considered a safer bet than an individual. Whether it is fair or not fair is another discussion altogether.
With auto insurance, whether you’re purchasing a policy or hoping for a lower rate on an existing policy, see what deals are available for married couples because studies now point to the fact that married people are getting better auto insurance rates. Period.
With home insurance, most companies just give a flat-out-discount if you’re married. Here again, the bottom line is that couples get this type of automatic discount.
As you begin to consider your insurance rates, visit Policygenius to get quotes from multiple companies on car insurance, health insurance, homeowners insurance, renters insurance, and more to see the best deal around for you as a married couple.
Health insurance is easier — and cheaper —to maintain
In the 60 days following your marriage, you have the option to add one spouse to another spouse’s health insurance plan. This is a no-brainer in some cases; for instance, one partner may have great coverage through an employer while another does not. And insurers generally charge less for a single policy covering two people than they do for two separate policies. If you both have insurance before marriage, you may choose to compare plans and sign up together for the better deal.
You’ll also get far better rates on long-term care insurance as a married couple. It’s smart to plan for this type of coverage before you need it; my dad’s long-term care policy ended up saving both my parents a ton of money.
Additionally, you can transfer any disability, Medicare, and veteran benefits to a spouse.
This is a big financial bonus of getting married, though it pays off pretty far down the line. Most married people can claim either their own Social Security benefits or spousal benefits worth up to 50% of their partner’s allotment when the time comes. Their spouse still receives the same amount either way. And the benefits keep coming after retirement and in the case of disability or death.
If one partner earns more or pays more into Social Security already, the other partner reaps the benefits too— even if they’ve never paid into Social Security themselves.
You save a bundle on taxes
The tax benefits of marriage tend to help out both spouses, especially if one earns more than the other. The lower-earning spouse can be a “tax shelter,” keeping the couple in a lower tax bracket and saving both partners money come tax time.
Couples filing jointly will generally be in a lower tax bracket than single filers, even if only one spouse is bringing in income. As a bonus, the IRS lets couples take a standard deduction that’s twice as high as the single-filer deduction.
Married couples are also exempt from estate tax and gift tax, as long as they’re giving money or assets to the other person. You can leave a significant estate to your spouse, or give them $14,000 or more in money or valuable items, and avoid the hefty tax you’d get otherwise.
Retirement options improve
Spouses can inherit each other’s retirement accounts, combining another account with their personal IRA to maximize account growth and benefits; you have more time to withdraw funds. And if one partner is the sole income earner, the other can contribute to a spousal IRA — an option they wouldn’t have if they were single and unemployed.
Marriage can provide a safety net in the short and long term. But good individual financial practices are still important after you get married. Open discussion about spending habits, savings goals, and priorities can ensure smooth financial sailing in your life together.
Summary
No one gets married for financial reasons, but many newlyweds will be happy to know there are plenty of financial benefits to marriage. From tax savings to better retirement options — there are tons of savings you may not have even considered.
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