Getting married is a thrilling and sometimes stressful experience. With half of marriages ending in divorce, it is important to make sure your marriage gets off to the right start. Other than infidelity, one of the leading causes of divorce is financial issues. To prevent money mistakes from hurting your marriage, make sure to watch out for potential problems along the way.
5 Money Mistakes That Could Hurt Your Marriage
One of the most obvious cause of financial arguments is debt and bills. If you do not have the income to cover your bills each month, it can naturally start arguments. Start your marriage by reducing your debt and making sure that your income is enough to cover your expenses. The following five money mistakes also need to be avoided if you want to have a happy, long-lasting marriage.
1. Spending Too Much on Your Wedding
In 2016, the average wedding cost $35,329. This amount is almost enough to pay off your student loan debt, and it would easily cover a down payment in many parts of the country. Unfortunately, an expensive wedding might make for beautiful pictures, but it can lead to divorce. Couples who spend more than $20,000 were 3.5 more likely to get a divorce than similar couples who spent $5,000 to $10,000. You can lower your wedding cost by picking a natural, outdoor location, renting your dress and finding other ways to save. Your biggest memory of the day will be about marrying the spouse you love and being with your friends, so don’t spend so much that you are in debt for the first few years of your marriage.
2. Student Loans and Marriage
In 2016, the average college graduate had $37,172 in student loan debt. Now, delinquencies accounts for 11 percent of all student loans. This enormous financial obligation can generally not go away in a bankruptcy, and it can affect your marriage. Loans can make it harder to get a mortgage, rent an apartment or buy a car. It can cut into the income you make as a couple. If one partner cannot pay their student loans, it could result in debt collector calls and your tax returns getting taken. Marriage can also affect your income-contingent loan repayment because it makes your income go up. Before you get married, you have to find a way to resolve this money mistake together.
3. Not Having the Talk
One of the biggest, and most surprising, money mistakes in marriage is not talking about finances. If one partner is a saver and another is a spender, it can drastically affect how happy you two are in the marriage. You can still get married with opposing financial beliefs, but you have to find a way to talk about them and resolve the problems beforehand. If your money habits are drastically different though, they might not be possible to resolve.
Other than your approach to money, you also need to discuss whether you want a joint account. Do you want to split the bills in half or pool your money together to cover everything? There is no right answer to these questions, but it is something that you should decide before you get married.
4. Forgetting How Marriage Affects Your Taxes
Once you get married, the Internal Revenue Service (IRS) views you as a couple. You can file your taxes as married filing separately, but you will get some benefits like the Earned Income Tax Credit by filing jointly. At the same time, being married could push you into a higher income bracket. This can result in a higher tax bill as well as pushing you into an income level that is too high for certain retirement accounts.
Getting married can affect your tax returns in a number of ways that can cost you money. You have to make sure that your employer withholds enough from your paycheck to cover your taxes. Otherwise, you could end up with a surprisingly large tax bill (as well as potential fines and penalties) after you get married.
5. Spending Too Much on an Engagement Ring
While a diamond ring might say forever, it can also say forever in debt. In research studies, the more that couples spend on rings and weddings, the more likely they are to get divorced. The average engagement ring cost $6,000 in 2016. With student loans, the wedding, mortgages and bills to also consider, spending thousands on a wedding ring is probably a mistake. Obviously, you should talk about this with your spouse first before deciding if an expensive ring will strain your budget or hurt the marriage. In many cases though, that shiny rock won’t be worth the money after a few years of marriage.