Moving In Together Doesn’t Match the Financial Benefits of Marriage, but Why?
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Moving In Together Doesn’t Match the Financial Benefits of Marriage, but Why?

Married couples are four times as wealthy as unmarried couples who live together

By JULIA CARPENTER
Tue, Nov 8, 2022 8:37amGrey Clock 4 min

A walk down the aisle can be a route to greater wealth and prosperity for couples in the U.S. Married people have higher net worths and are more likely to be homeowners than their unmarried counterparts their age are.

The mystery, though, is why cohabitating but unmarried couples struggle to build wealth in the same way. As of 2019, the median net worth for cohabiting couples age 25 to 34 was $17,372, a quarter that of the $68,210 for married couples of that same age range, according to data from the Federal Reserve Bank of St. Louis. For singles it is $7,341.

The wealth gap between partnered and married couples is larger than one might expect, said Ana Kent, a senior researcher at the St. Louis Fed. “It’s so intriguing,” she said.

Over the past two decades, Americans are moving in together at higher rates, according to data from Pew Research Center. The share of U.S.adults who are currently married steadily declined from close to 60% in the 1990s to under half in 2019, according to Pew. Over the same period, the share of adults age 18 to 44 living with a partner climbed to 59%.

Many young couples now approach marriage as a “capstone” event, said Andrew Cherlin, professor emeritus of sociology and public policy at Johns Hopkins University, who studies marriage.

“If you build an arch, the cornerstone is the first piece you put in and the capstone is the last,” he said. “What this means is people see an economic bar they need to clear before they get married. Couples wait until they have good jobs, a car that won’t break down, maybe even a house. Then, they get married.”

Melissa Mowery, a 30-year-old communications manager in Asheville, N.C., has been with her boyfriend for five years and living together for nearly four. The two don’t share a joint bank account, but they split the cost of rent and other bills. Even so, Ms. Mowery said she can’t make sense of the financial gap between her relationship and that of married couples.

“We’re already saving a lot of money and splitting the cost on most things,” she said. “I don’t understand how married couples are accumulating wealth in a way we’re not doing.”

While there are legal and tax benefits to marriage, research suggests the financial security and long-term mind-set of those who tie the knot may also be a powerful driver of wealth. More married couples pool their money—such as sharing savings accounts and investing together—to achieve certain goals, Ms. Kent said. Cohabiting couples are less likely to combine finances and investments.

Working with two incomes and combining their investments to maximise compound interest can significantly increase a couple’s financial prospects, said Emily Garbinsky, associate professor of marketing at Cornell University, who has studied couples’ financial behaviour. Simply put, married people may be more likely to be on the same page financially, she said.

“Married people may be much more likely to have these conversations around what goals they have for their financial future,” she said. “There seems to be something very special and unique about deciding to share finances.”

Unmarried couples may be less willing to commingle their money, said Prof. Garbinsky.

“Our money, our income, represents a huge part of who we are,” she said. “[Sharing] that can be scary for people, so they tend to be very protective.”

Photos: Teaming Up for the Homeownership Dream

Both married and unmarried couples who do pool finances also experience greater relationship satisfaction and may even stay together for longer, Prof. Garbinsky said.

Housing is one of the biggest factors in establishing a couple’s wealth. Compared with single people and cohabiting couples, married couples hold a larger concentration of housing wealth, according to data from the St. Louis Fed.

“Most of my married friends have bought a house,” Ms. Mowery said, noting high housing costs in her area. “I just don’t know how they did it. Everyone talks about how when you get married, you accumulate wealth but I don’t know what that means.”

In the current hyper competitive housing market, as smaller, more affordable starter homes vanish and housing affordability declines, single people and cohabiting couples are often at a disadvantage.

“These [housing] prices are so high that you really need pooled resources to be competitive in some of these markets,” said Lowell Ricketts, a data scientist at the St. Louis Fed.

Socioeconomic factors play a role in the difference between married and partnered wealth; the higher your income, the likelier it is that you’ll marry, a 2017 report by the American Enterprise Institute found.

Plotting a path forward as a couple without much money isn’t as easy as getting hitched and suddenly seeing your wealth grow, Prof. Cherlin said.

“Someone looking at the data would say, ‘Well, these married people are much more successful than their cohabiting people. If these people would just get married, they’ll do better,’” he said. “Whether or not there is truth in that, people don’t tend to believe in it anymore. People who aren’t doing well financially don’t see a clear path to financial success.”

Marriage rates are lower among Black and Latino groups, and those same households of similar ages held far less wealth than their white counterparts, whether married or partnered. Family structure also influences the overall net worth of a household. Partnered couples with young children tend to have less wealth than partnered couples without children.

Some cohabitating couples are refashioning their financial goals. Instead of buying a house, Ms. Mowery and her partner recently looked into a house share that would allow them to spend part of the year working from Belize. They have discussed getting married, although haven’t made plans to do so any time soon.

“I care a little bit less than I thought I would about marriage,” she said. “Once you start living together, it almost feels like you made that commitment.”



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What We Fight About When We Fight About Money

New research tackles the source of financial conflict and what we can do about it

By JULIA CARPENTER
Mon, Nov 27, 2023 3 min

When couples argue over money, the real source of the conflict usually isn’t on their bank statement.

Financial disagreements tend to be stand-ins for deeper issues in our relationships, researchers and couples counsellors said, since the way we use money is a reflection of our values, character and beliefs. Persistent fights over spending and saving often doom romantic partnerships: Even if you fix the money problem, the underlying issues remain.

To understand what the fights are really about, new research from social scientists at Carleton University in Ottawa began with a unique data set: more than 1,000 posts culled from a relationship forum on the social-media platform Reddit. Money was a major thread in the posts, which largely broke down into complaints about one-sided decision-making, uneven contributions, a lack of shared values and perceived unfairness or irresponsibility.

By analysing and categorising the candid messages, then interviewing hundreds of couples, the researchers said they have isolated some of the recurring patterns behind financial conflicts.

The research found that when partners disagree about mundane expenses, such as grocery bills and shop receipts, they tend to have better relationships. Fights about fair contributions to household finances and perceived financial irresponsibility are particularly detrimental, however.

While there is no cure-all to resolve the disputes, the antidote in many cases is to talk about money more, not less, said Johanna Peetz, a professor of psychology at Carleton who co-authored the study.

“You should discuss finances more in relationships, because then small things won’t escalate into bigger problems,” she said.

A partner might insist on taking a vacation the other can’t afford. Another married couple might want to separate their previously combined finances. Couples might also realize they no longer share values they originally brought to the relationship.

Recognise patterns

Differentiating between your own viewpoint on the money fight from that of your partner is no easy feat, said Thomas Faupl, a marriage and family psychotherapist in San Francisco. Where one person sees an easily solvable problem—overspending on groceries—the other might see an irrevocable rift in the relationship.

Faupl, who specialises in helping couples work through financial difficulties, said many partners succeed in finding common ground that can keep them connected amid heated discussions. Identifying recurring themes in the most frequent conflicts also helps.

“There is something very visceral about money, and for a lot of people, it has to do with security and power,” he said. “There’s permutations on the theme, and that could be around responsibility, it could be around control, it could be around power, it could be around fairness.”

Barbara Krenzer and John Stone first began their relationship more than three decades ago. Early on in their conversations, the Syracuse, N.Y.-based couple opened up about what they both felt to be most important in life: spending quality time with family and investing in lifelong memories.

“We didn’t buy into the big lifestyle,” Krenzer said. “Time is so important and we both valued that.”

For Krenzer and Stone, committing to that shared value meant making sacrifices. Krenzer, a physician, reduced her work hours while raising their three children. Stone trained as an attorney, but once Krenzer went back to full-time work, he looked for a job that let him spend the mornings with the children.

“Compromise: That’s a word they don’t say enough with marriage,” Krenzer said. “You have to get beyond the love and say, ‘Do I want to compromise for them and find that middle ground?’”

Money talks

Talking about numbers behind a behaviour can help bring a couple out of a fight and back to earth, Faupl said. One partner might rue the other’s tightfistedness, but a discussion of the numbers reveals the supposed tightwad is diligently saving money for the couple’s shared future.

“I get under the hood with people so we can get black-and-white numbers on the table,” he said. “Are these conversations accurate, or are they somehow emotionally based?”

Couples might follow tenets of good financial management and build wealth together, but conflict is bound to arise if one partner feels the other isn’t honouring that shared commitment, Faupl said.

“If your partner helps with your savings goals, then that feels instrumental to your own goals, and that is a powerful drive for feeling close to the partner and valuing that relationship,” he said.

A sense of mission

When it comes to sticking out the hard times, “sharing values is important, even more so than sharing personality traits,” Peetz said. In her own research, Peetz found that romantic partners who disagreed about shared values could one day split up as a result.

“That is the crux of the conflict often: They each have a different definition,” she said of themes such as fairness and responsibility.

And sometimes, it is worth it to really dig into the potentially difficult conversations around big money decisions. When things are working well, coming together to achieve these common goals—such as saving for your own retirement or preparing for your children’s financial future—will create intimacy, not money strife.

“That is a powerful drive for feeling close to the partner and valuing that relationship,” she said.

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