Want to get richer? Get married!
Curiosity regarding Prince Harry and Meghan Markle’s fairy tale marriage continues to grow following the announcement that the newlyweds are expecting a baby. The teaming of a successful actor with a member of the royal family also provides useful lessons about life and money.
Just as power couples made up of actresses and royal family members become stronger by teaming up, ordinary folk can too – if they do it right.
In recent years, rhetoric about high divorce rates and millennials shunning or postponing marriage – often into their 30s and 40s – have obscured the very real financial benefits of coupling up.
According to research done by Jay Zagorsky, married people grow their wealth 77 percent faster than singles do. There are also signs that those benefits increase exponentially if both partners work. For example, research by Statistics Canada suggests that the increasing share of families with two highly-educated earners is one of the main reasons driving family income inequality.
Married couples and, to some extent, common law ones do better for a variety of reasons. These include:
Partners focus on what they do best
As Adam Smith noted in The Wealth of Nations centuries ago there are real advantages to splitting up work and focusing on stuff you like. The idea of the man hunting mastodons while his girl gathers berries is a bit outdated. But there’s nothing wrong if one partner prefers to cut the grass and the other wants to find the best deal on draperies.
Sharing a bed isn’t just fun. It’s also economical. That’s because by definition you only need one of them. You also only need only one room to put that bed in it in. Couples can also get away with having just one toaster, air conditioner, home insurance plan and many other things. Those savings add up. Married couples, and to some extent common law partners, can also better pool their purchases and thus benefit from volume discounts.
Thinking long term
Couples tend to plan better, think longer term and thus to save more than single folks. This plays out big time when it comes to buying a family home, which today can be so expensive that the purchase is often difficult to pull off alone. Family homes also tend to be Canadians’ biggest single asset. Better still, despite recent declines, real estate has also generated massive capital gains during the past decade, which in turn further leverages the advantages of coupledom.
True, wedding on its own is far from a sure path to financial success. For it to work the couple has to stay together. In fact, Zagorsky, who analyzed data from the National Longitudinal Survey of Youth which tracks individuals in their 20s, 30s and early 40s, shows that divorce has the opposite effect and leads to a massive wealth decline.
Despite the clear financial benefits, Western couples continue to marry primarily for love and to closely study and talk about successful examples of other couples.
We thus likely haven’t heard the last of the Harry and Meagan story. If the research is correct, we can expect bigger and better things from this freshly formed power couple.