Marriage and Money: How Getting Married Can Impact Your Finances

When you and your partner first become engaged, it’s common not to immediately discuss the tax implications of such a decision. While planning for a future and a wedding it is important to know that nearly all dreams come with financial considerations. From paying for a dream wedding to paying taxes after you get married, the financial choices you make today could have a big impact down the road.

While most wedding tips focus on fun details like the location, guest list, and food, we'd like to offer wedding tips from a different perspective, a financial one, that may empower you to make well informed decisions based on facts during this special time.

Marriage and money benefits

You likely didn't get engaged for the marriage tax benefits, but the good news is, there are numerous financial advantages. Many people may assume it's bad for couples (financially speaking) to get married because they end up paying more for taxes or other expenses. While it’s true that you now have two sources of income and only pay for one place to live, there may be even more benefits than you realize.

Marriage can change your insurance

For starters, when you get married, it’s possible your spouse may have better healthcare benefits, which you may be able to access. Getting married is a life event and is an ideal time to take advantage of changes in health insurance, which may be cheaper than what you are currently paying.

The potential savings don't stop at healthcare premiums though. Your auto insurance could benefit too, since many married couples can earn discounts by bundling more vehicles and policies together.

Tax benefits of marriage

Now it's possible when you get married that you qualify for a lower tax bracket, which may eliminate the "marriage penalty tax." Before changes in tax laws, couples used to be penalized with higher tax brackets when their incomes were combined. Today, tax brackets are more aligned with what you were when you filed single so a couple may not be penalized for combining their incomes and filing jointly, which could help reduce your overall tax bill.

Ways to pay for a wedding

When you are engaged, one of the biggest financial decisions is how to pay for the wedding. At an average cost of $33,000 in 2024, it is important to have a timely discussion, so you can set your budget and payment strategy.

Most people do not have access to tens of thousands of dollars to spend without considering where it's going. Even without a large sum at hand, there are a variety of ways to pay for a wedding. Fortunately, you can use multiple tactics to cover the costs, which include:

• Ask for money. Reaching out to family members or friends to ask for contributions is one method to help offset costs. Traditionally, a bride's family was expected to pay for the majority of expenses. Today's couples are no longer adhering to these "rules" and are getting both sides of the family involved in sharing the costs.
• Cut back on expenses. Paying for a wedding is an ideal time to review your personal budget to see where you have opportunities to cut out some expenses to allocate toward a wedding. You may decide you can forgo pricey subscriptions for a few months or not eat out as much to increase wedding funds.
• Establish monthly savings or draw from savings. If your monthly budget has room to spare then set up a savings account specifically earmarked for wedding expenses. You can even set up automatic withdrawals.
• Earn extra income. With today's gig economy, there are more ways than ever to earn additional income; ideas range from food delivery drivers and rideshares to online gigs like freelancing or consulting. You can also make money with services, such as dog walking, babysitting, or home projects.
• Use a credit card. Most wedding items can be paid for with a credit card, but this comes with its downsides. You most likely have to pay interest on these purchases and taking on more debt can harm your credit score. This could be an issue if you plan to purchase a property or vehicle soon.
• Use a personal loan. If you've exhausted all options for paying for a wedding, you may consider taking on a personal loan. Like a credit card, there are interest charges and impacts to your credit report to keep in mind, however, it could be a convenient option that you can pay off over time.

Pros and cons of using a personal loan to pay for a wedding

Many brides and grooms may not initially plan on using a personal loan to pay for their wedding, and this advice is often not included in financial wedding tips. Make sure to carefully consider the pros and cons before taking on additional debt.

Pros

• Funding typically occurs quickly once approved, sometimes within a few hours depending on the lender.
• The funding you receive can be used towards a variety of expenses, giving you greater flexibility for wedding planning.
• There are numerous personal loan options which means more competition. It could mean more favorable interest rates and repayment terms for you.
• There may be higher borrowing limits available to you with a personal loan, versus the borrowing limit of a credit card or family member.

Cons

• Defaulting on a personal loan payment has serious consequences for both your credit and stress levels. A tarnished credit report can prevent you from future borrowing opportunities, such as applying for another credit card, auto loan, or mortgage.
• The interest rate added to the loan means you could pay hundreds (or thousands) more than the purchase price.
• The required monthly payments could put stress on a budget and prevent spending on other important categories. If you're already struggling with monthly payments then taking on a personal loan will only make it harder.

Should I take out a personal loan for wedding expenses?

Taking out a personal loan for wedding expenses is a big decision with significant financial consequences. The impact on your credit score and the required monthly payment for payback may make it undesirable. On the other hand, you may be comfortable with these concerns and feel it is worth it to finance your dream wedding. A personal loan can provide a quick infusion of funds and possibly a better interest rate (versus a credit card) so you can move on with your wedding plans.

The bottom line

Whatever decision you make regarding how to pay for your wedding, it's important to thoroughly discuss it with your partner. This applies not only to weddings but also to all the financial decisions you have to make as a couple. Getting married brings on an entirely new dynamic to finances and by working together, you two can make the most of the financial advantages it offers.