To tie the knot or not: what marriage means for your finances

At a certain point in a long-term relationship, the big question is almost inevitable: “So, when are you two getting married?” In the past, the linear path from dating to marriage to cohabitation and parenthood was often unquestioned. But as attitudes have shifted, more alternatives to this model have cropped up, and marriage isn’t a given any more. 

Today, making the decision to get married often means weighing all kinds of important factors. To help you prepare to tie the knot — or not — we’ve pulled the latest stats and information on the financial and legal implications of saying “I do.”

Between 1964 and 2019, marriage rates across Europe dropped on average by 50%, and there’s been a similar decline in the USA, Canada, and Australia. This trend is happening across cultures worldwide, too: In 2022, China reported its lowest number of marriages since 1986, and it’s estimated that 89% of the world’s population currently lives in a country where the number of marriages is declining.

While most young people agree that getting married comes with significant financial benefits, many are prioritizing other goals before walking down the aisle. This could be becoming financially secure, establishing a career, and paying off any outstanding debts. And it’s not just Millennials that are putting financial stability first. 66% of Gen Z are also deprioritizing marriage in favor of financial independence, a successful career, and a home of their own. 

This shift in priorities has caused more couples to move in together before getting married — in fact, there’s been a sixfold increase. In the United Kingdom, the number of cohabiting couples increased by 25% between 2008 and 2018, outpacing married couples and becoming the fastest-growing demographic. The same trend is happening across Europe and the USA. Rather than simply being part of marriage, cohabitation is now a separate stage in the dating process and may or may not lead to a wedding further down the road. 

Additionally, thanks to stagnating wages and steadily increasing rental prices and home ownership costs, cohabiting makes financial sense for many young couples. Splitting the rent helps to reduce the financial burden and provides more opportunities for couples to save.

After watching many marriages in their parents' generation end in divorce, people today tend to be more cautious and strategic when it comes to dating. Compared to previous generations, Millennials are waiting four years more than Gen X and seven years more than Baby Boomers to get married. This has also contributed to lower divorce rates. Since the ‘80s, divorce has declined by 24%, which could be due to a more careful partner selection process.

For many couples, getting married is a joyful experience. It can positively impact health and longevity and can give people a sense of security. Plus, many breathe a sigh of relief knowing they don’t have to play the dating game anymore. Many married couples also enjoy a larger financial cushion and a variety of tax breaks. For those that decide to get married, here are some of the top perks — besides spending your life with someone you love — that you can look forward to.

Once married, some couples can enjoy an array of financial perks. While tax benefits for married couples vary from country to country, the bonuses generally include lower capital gains tax, income tax, and lower or no inheritance tax. 

Couples living in Luxembourg, Germany, Ireland, Poland, and Belgium stand to benefit the most from tax regulations. Meanwhile, married couples in Greece, Malta, and Cyprus might find that they have less disposable income due to a reduction in means-tested benefits and pensions.

Aside from potential tax benefits, some research suggests that married couples are, on average, four times as wealthy as unmarried cohabiting couples. This could be because married individuals have the financial security to take their time job hunting, allowing them to hold out for the most lucrative positions. Researchers also argue that married individuals are more motivated to climb the career ladder faster than non-married couples, knowing that their spouse will be directly impacted by their wage.

Some research suggests that married couples are 8.8% happier than divorced or separated people, with marriage being the leading indicator of happiness rather than economic status. Additionally, married couples who consider their partner to be their best friend (around 50% of couples) are likely to be significantly happier — not only than unmarried individuals, but also the other 50% of married couples. 

However, some researchers think that married couples may seem to be happier than non-married couples and individuals simply because happier people are more likely to get married. And while happiness among married couples peaks during the first year of marriage, happiness levels return to a more “normal” baseline after a few years.

Marriage can come with a host of financial, legal, and social benefits — and drawbacks. With 40% of Millennials signing a prenup before getting married, people are taking an increasingly pragmatic approach to marriage and thinking through many possible scenarios. It’s important to be aware of the downsides, too, before tying the knot.

In 2022, the average cost of a wedding was $30,000, or roughly €27,000. That’s the equivalent of a down payment on an apartment or the cost of a car. Typically, the most expensive parts of a wedding are the venue, which accounts for roughly a third of the budget, and the catering. Of course, more guests mean higher costs, with catering costing an average $71 (around €65) per head. As weddings in Europe average 100–130 attendees, that amounts to roughly €7,500 spent on food alone. 

And it’s not just the day itself that comes with a steep price tag. Across Europe, the average amount spent on a wedding ring is €2,300, and some customers also opt to pay for additional ring insurance that costs roughly 1-2% of the ring’s value per year. Plus, there’s the cost of a honeymoon — it’s easy to see how the expenses can add up. Of course, the cost of a wedding will vary significantly depending on the kind and size of the event. 

Anecdotally, many married couples barely make it down the aisle before the interrogation starts about when they’re having children. Questions like these are often well-intentioned — think of the stereotypical parent eagerly waiting for their first grandbaby — but might not consider a couple’s personal preferences or circumstances.

While many married couples do choose to have children, an increasing number of couples are staying child-free. 25% of married couples decide against having children altogether while one in seven couples want children but will have difficulty conceiving. That’s why it’s usually best to avoid asking people about their plans to have children — it’s a deeply personal, often sensitive topic.

Although younger people are getting divorced less frequently than previous generations, a significant percentage of marriages will still likely end in separation. Unfortunately, divorce can be expensive. 68% of couples getting a divorce report dealing with unresolved financial issues, with the cost of getting divorced coming in at around €16,500. 

However, this figure can easily increase. Take the added costs of moving, buying new furniture, and no longer sharing living expenses, and you can see how impactful divorce can be. One of the best ways to avoid the financial fallout of a divorce is to save up for an emergency fund. That way, if the worst case happens, there’s a financial cushion to fall back on.

With a little trust, planning, and good communication, managing money with a partner can be a success. But why not get some extra help from your bank? Open a premium N26 bank account and create up to 10 Spaces sub-accounts, nested within your main account. Save for shared goals, and name each space according to your objectives — like “Honeymoon,” for example. Plus, set up automatic transfers into your Spaces with the Rules feature — it’s a fuss-free way to easily put money aside every month. Find the bank account that’s your perfect match today.