Love and money usually don't mix well. The truth is that most guys don't think about their wallets when they pop the question. But from a financial perspective, not weighing the changes that will occur when you tie the knot can be quite costly. Here are some things to consider before you get married.
what is a common law couple?
While most of us easily fall into one of two categories -- married or single -- a few guys may actually be married without knowing it. Many states recognize what is known as the "common-law marriage."While the particulars vary from state to state, you should be aware that you might be subject to common-law marriage if you intend to be married, live together, and consider you and your girl husband and wife. The point is that acting like you're married (e.g. mixing your money and assets or wearing rings) can have serious consequences. It's certainly something to consider when you weigh the financial pros and cons of marriage, because you can't think that simply living with her sans official paperwork will solve your problems.
1- Liability
Spouses are liable for most judgments against their mate. It's seems like a harsh rule, but when the law talks about marriage as a partnership, it's not just referring to the way you and her ought to make important decisions.Like partners, you are responsible for the actions of your other half. If she gets into a car accident and doesn't have the money to pay for the damages, the other party can collect from you. If she signs up for a new cell phone carrier and doesn't pay, that bill goes to you. If she starts her own business and is forced to declare bankruptcy, you'll be drawn into the proceedings as well.
As a general rule, the only place that the liability train doesn't take you is into criminal court. In other words, if she commits a crime, she's on her own. If, however, she prepares your joint taxes (or rather doesn't prepare them) you can both be on the hook for criminal liability.
2- Credit & debt concerns
When you marry, your credit becomes her credit, and your debt becomes her debt. Suppose your wife takes out a credit card in her name, charges her shopping expeditions, hair and nails to the card, and buys nothing on the card for you. Sounds familiar?Now suppose that you two get divorced. In theory, you should settle who will pay for the card during the divorce, but if she defaults (and she just might) the credit card company has the right to come after you.
Whether or not you can fight them depends on a number of factors (including the law in your state). The important thing to know is that you can't simply assume that because it's "her" card, you aren't legally responsible for it -- although, after the split, it's a good idea to have your attorney put the credit card companies on notice of your divorce.
3- Survivor's benefits
Usually, survivor's benefits are a bonus to marriage -- you get to choose between your federal retirement benefits or those of your spouse, whichever is greater. Not bad. But if you're a widower, you could find yourself making a tough choice between the woman you want to marry and the benefits you'll need.It might work like this: Your first wife made a good living and died with large benefits coming to her. You need the money because you didn't make as much, and you've geared your financials to supporting a certain lifestyle.
Now comes the twist. You meet someone else and you want to marry her, but there's a problem: She doesn't make very much money. If you marry her, you'll get her benefits. In other words, by marrying her, you take a financial hit.
4- Income taxes
You hear a lot of rhetoric about the marriage tax penalty. The truth is that most couples aren't affected by it. Suppose you make an annual salary of $50,000 and you're single. You'll be in the 25% tax bracket (depending in which state you reside). If you get married to a woman who doesn't make anything, you'll actually save, because, when you file jointly, you'll drop to the 15% bracket. But if she works, you might have a problem.Where the so-called marriage penalty generally bites couples is when both you and her have about the same income. So now in my example, you have a combined income of $100,000, which means you're both in the 25% bracket, which is more than you would've paid if you were single.
5- Children
This one probably goes without saying: Kids cost money -- a lot of money. You must feed, clothe and shelter them for at least 18 years. Per child, the costs can exceed $100,000 easily.While single guys can become fathers too, it's more than likely that one of the reasons you get married is to have children. So when you decide to pop the question, know that there could be a huge additional cost not too far down the road. And yes, she may not want kids now, but women can and do change their minds about children when they get older.
6- Insurance
Medical, auto and dental insurance are all necessities, even when you're single. When you get married, you'll want to expand the plans to cover your whole family. Assuming that her risk is about the same as yours, your costs won't double, which means you'll save in the aggregate. But in terms of out of pocket expenses, you will pay more.However, the real costs come with life insurance. Most single guys don't need life insurance (since they don't support anyone, there won't be any need to provide for someone should they die). But if you've got a wife, you'll need life insurance. And depending on your age and the type of policy you buy, you can spend anywhere from a few dollars a month to a few thousand dollars a year.
stay single for money reasons
Like anything, you need to take these costs with a grain of salt. Some are built in, no matter what. For example, married guys need life insurance far more than single guys. But others can be reduced or avoided based on behavior and planning. The key is to talk these costs over with her before you get married (or at the very least be able to have a frank financial conversation with your wife).If you and her plan your finances, rather than letting your financial situation dictate your choices down the road, you're less likely to find yourself arguing over money, which in turn can make for an easier marriage.
Resources:
http://en.wikipedia.org/wiki/Common-law_marriage
http://www.bankrate.com/nltrack/news/pf/20051017a1.asp
http://www.washingtonpost.com/wp-dyn/content/discussion/2005/06/08/DI2005060802216.html
http://finance.yahoo.com/columnist/article/moneymatters/956
http://moneycentral.msn.com/content/Taxes/P48908.asp
http://www.fool.com/taxes/2000/taxes000519.htm
http://www.irs.gov/formspubs/article/0,,id=133517,00.html
http://personalinsure.about.com/cs/onlinelearning/a/aa082103a.htm
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