My friend recently asked me a very interesting question. Namely, she and her boyfriend are planning on getting married sometime this year. They have been together for 4 years now and were holding off until she finished school. She was receiving financial aid and if she would have gotten married, she would of had to include her boyfriend’s income on her FASFA and most likely she would not have gotten any aid. She and her boyfriend shared a bank account for almost 3 years and have never fought about money. So as you can guess, their main concern is, if they get married, will they get as much back during tax time. Also, their daughter will have to go under his insurance, which is fairly expensive. She wonders if there are any other financial aspects of marriage they aren’t considering.

In my opinion, it’s not a good idea to look at a tax refund as a reward the government gives you for paying your taxes and something to be sought out. Many people are not aware that a tax refund is the government saying “you have paid us too much money in taxes, so we think we should send it back to you”. Honestly, you are better off looking for ways to lower your tax liability. Your goal should be to get $0 back or owed come tax time. You don’t want to wait to see your money, when you could be doing other things with that money, for example pay debts or invest in your own business. It’s essentially you giving the government a free loan.

Cheaper health insurance coverage

Married couples often have more choices for health insurance coverage. If employers of both spouses provide health plans, they can each keep their own workplace coverage or they both join one spouse’s plan. In other words, the couple can choose the doctors they would like to have and save money on premiums. Another great advice by my father in-law is – don’t just think financial. Think legal rights. For example, if one of the spouses is incapacitated and unable to make medical or financial decision, don’t you want them making those calls on your behalf? Even though it’s technically possible to go to a lawyer and get all sorts of documents in line to give each other decision rights, it can be utterly useless and expensive unless you are carrying these documents on you all the time. A good lawyer can cover these cases when a person can’t prove their rights, but a spouse does not pay taxes on assets they inherit from their deceased spouse, whereas a person identified in a will who is not a spouse would have to go through the whole estate processing and taxes.

Some say that getting married is not much different than living together in a financial sense. It’s true that no matter what you do, your taxes of the current year will look completely look different than those of the previous year. Our entire tax system has changed. The insurance numbers can be obtained by contacting the HR department at your spouse’s place of work. If you have a child (and my friend I mentioned in the first paragraph does), Medicaid can tell you if your child will still qualify for coverage at your married income level – or they may even publish income guidelines for your state. Even though each state is different, the difference is not too huge and these advices can be applied almost anywhere.

 

Save money on rent

Getting married can save you money in a plenty of ways. Pay one rent instead of two. Even better, getting married doesn’t mean increasing your lifestyle. This may sound like “water is wet”, but it’s best to spend as less money as possible. Now if we have a married couple like in the example, I would recommend to try to live off one income and deposit the other one into a savings account. The first year or two will be tough of course. However, if something ever happens, like a car breaking down or an expensive appliance at home goes out or if one spouse loses their job, you have a savings to fall back on in the meantime. Many couples have nothing in savings and live paycheck to paycheck. Even though it’s hard for a freshly married couple to save any money, with a strong will it’s possible to start a savings account slowly but surely. You could tell right now, “Well, everything’s fine, but can we speak of actual numbers?”. According to this online calculating tool, getting married costs you an additional ~$3,000 in tax liability. Insurance isn’t cheap either, you should count on a $200-$300 at the bare minimum.

 

Combined savings account

I always recommend to my friends and co-workers some sort of life insurance policy. Death is often unexpected and can cause a financial burden. It’s doesn’t have to be a top-class life insurance, but it’s very helpful, especially if someone decides to spend more time on child, while the other spouse can focus on work. I would recommend to married couples (and those who plan to marry this summer), to make sure you and your spouse are clear with each other about finances. It makes a lot of sense for each spouse to have a personal account as well as a combined account that both spouses can use. It’s not a good idea to keep money and expenses a secret. Money is a part of life, and not a leverage over the other person in the relationship.