Married people are richer. If you read much personal finance literature, you’ll have learned this by now. While it’s an interesting observation, what’s more interesting is why this is:
Speculation has involved a variety of topics:
1) Economies of Scale: In married households, there are economies of scale. Basically, its more efficient for two people to live together than for a single person alone.
2) Personality: Married people have personalities which are more conducive to building wealth. For example, if you’re a looser, an idiot or flaky it’s less likely that you’ll both get married or build wealth. In other words, it might be that married people are richer simply because they have personalities more conducive to building wealth (e.g. they aren’t losers). In this case, its a selection effect, that is people with personalities conducive to building wealth are also those who get married.
3) Expectations and Lifestyle Changes: Society values marriage. It might be that after people become married, they change their behavior to meet social expectations. As their behavior changes, they become more responsible, save for the future, etc. It may also be once married, couples receive more financial support from relatives, etc. Basically, social processes surrounding marriage make people get their act together.
If you’re looking to seriously understand why marriage builds wealth, you might consider the book, The Case for Marriage.
Personally, I think the reason why married results in greater wealth is probably due to some combination of the three topics.
Most recently, a study last year by Jay Zagorsky has drawn a lot of media and blog attention to this topic. I’ve read the Zagorsky article. While it’s important, one should remember that it’s not exactly a new finding. Sociologists have known that marriage builds wealth for years.
For news on Zagorsky’s study:
Blogland commentary regarding Zagorsky:
Free Money Finance – The impact of marriage on net worth
Science Blog – Divorce cuts person’s wealth by 77 percent
In terms of my and Miel’s situation, we got married last July out in Oregon. So far, wealth has increased by 26% this year – From $300,000 at the start of the year, to $380,000 when we added it up a couple of weeks ago.
Hope you enjoy!