Want to improve your financial net worth? Get married

Published: Saturday, March 2 2013 1:05 p.m. MST

Shan Freed and her 15-year-old daughter Alexis wait for John Freed to get something from the kitchen in their home in North Bergen, N.J.

Elizabeth Stuart, Deseret News

NORTH BERGEN, N.J. — John Freed remembers when he was young and single. He would go out with friends and spend money without thinking about the future.

"I was running around and having a good time," he says. "Then, one day, you wake up. You think, 'Enough of this nonsense. I don't want to wake up alone. I want someone in the house with me.’ ”

Freed, who is the owner of a financial services consulting firm in North Bergen, N.J., married in 1994. He discovered that marriage was about more than love and companionship — it also helped his financial net worth.

This wouldn't surprise Charles Murray, a scholar at the American Enterprise Institute and the author of "Coming Apart: The State of White America, 1960-2010." There was a time, Murray says, back in the 19th and early 20th centuries when marriage took things like finances into account.

"People looked upon marriage as only partly connected to love," he says.

Marriage was accepted as being multifaceted — a vehicle for raising children, a broad commitment to the community and a way to increase economic success.

"Marriage has been increasingly seen in narrower terms," Murray says. "It is epitomized by marriage vows using the phrase 'For as long as we both shall love.’ ”

But if people's perceptions of the purposes of marriage have contracted, the reality of marriage's broad influence has not. A research survey report by Alex Roberts at the Institute for American Values in 2010 found the economic impact of marriage is huge — increasing net worth by as much as 600 percent.

"(T)hose who became and stayed married tended to have much higher personal net worth than their peers," the report said, looking at, among other studies, a 1999 paper, "Marriage, Assets, and Savings" by Joseph Lupton and James P. Smith. "Being or becoming single had the opposite effect."

"The point people miss," Roberts, now a doctoral student in public policy at Ohio State University, says, "is that marriage is a tremendous wealth building institution."

Yet, according to a 2010 Pew Research Center survey, only 31 percent of Americans say financial stability is a very important reason to marry.

Growing family wealth

"People have basically erased every other function of marriage from their thinking about the institution," says Kay S. Hymowitz, William E. Simon fellow at the Manhattan Institute and a contributing editor for City Journal. "They imagine it only as this very intense relationship between two adults, and it is largely an emotional and psychological arrangement. They forget how important these other functions are."

Hymowitz says marriage puts together two people who are not just making a pact to stay together as husband and wife, but are also promising to build a life together. And building a life together means financial planning and saving.

The Institute for American Values report showed that singles who got married increased their household incomes by about 50 to 100 percent within five years.

A large part of this may be due to "selection bias." Barbara Dafoe Whitehead, director of the John Templeton Center for Thrift and Generosity at the Institute for American Values, explains that people who select marriage may have other personality aspects that improve finances. They may be better educated. For example, a 2010 Pew Research Center survey found there was a 16 percentage point gap in marriage rates between college graduates (64 percent) and people with a high school diploma or less (48 percent).

Quite simply, the people who are likely to choose marriage could also be the people who are likely to be more careful with their finances.

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