March 14 2014

Yo, Millennials: Marriage Creates Financial Security, Not Vice Versa

The Federalist

Hadley Heath

Many of today’s young adults have put the cart before the horse when it comes to marriage and money: They’re delaying marriage, and citing the lack of a solid economic foundation as the reason. Ironically, marriage itself can provide financial security, if it’s a life-long investment and with the right partner.

The Pew Research Center just released a fascinating new report on Millennials – the generation born between roughly 1981 and 1998. From the report: “Most unmarried Millennials (69 percent) say they would like to marry, but many, especially those with lower levels of income and education, lack what they deem to be a necessary prerequisite—a solid economic foundation.”

This sadly represents a bigger issue; many young adults today see marriage as an accomplishment rather than a journey. It could be that Millennials see financial security as a proxy variable for “Have I made it yet?”

The idea that someone must be a fully developed person (or that there is such thing) before marriage is misguided. Marriage is intended to be a lifelong relationship in which the two partners shape each other and change and develop together, often helping each other realize potential they wouldn’t otherwise.

When it comes to money, marriage can provide stability and economies of scale that aren’t as accessible for singles. The Book of Ecclesiastes has something to say about this: “Two are better than one, because they have a good return for their labor: If either of them falls down, one can help the other up. But pity anyone who falls and has no one to help them up.” This wisdom is just as true today as it was in Biblical times.

Social science bears this out: Married couples have increased odds of affluence, increased chances of moving out of poor neighborhoods, increased incomes, and are more likely to avoid poverty.

Millennial women are more likely than their female predecessors to have higher levels of education and higher earning potential.  Combining two one-income households into one two-income household means Millennial couples can reduce their overhead cost of living and improve their ability to pay down debt (a huge problem for the youngest generation) or even begin to save.

Marriage also wards against one very serious financial setback affecting many Millennials: single parenthood. Where there is sex, there is a risk of pregnancy, and demographic trends suggest that Millennials are not delaying sexual activity as late as they are marriage.

According to Pew, 47 percent of births to Millennial women are non-marital, about double the rate of previous generations. And according to the Census Bureau, about 45 percent of single-mother households live in poverty compared to 13 percent of married households.

Millennials would do well to avoid single parenthood, either by marrying earlier or delaying sex until our later wedding dates. Sharing a household is financially beneficial for childless married couples, but it’s even more critical for those with children.

Therefore, young adults who are serious about their relationships should see marriage as a bedrock foundation for future financial success, not a finish line. A lack of material wealth should not be a reason, or an excuse, for avoiding marriage.

There are, of course, important caveats to this argument.  Financial insecurity comes in various strains.  Sometimes it is a symptom of “just getting started” – youth, inexperience, and an accompanying low income. These circumstances can change and improve over time, and often improve faster when two people work together.

Sometimes, however, bad finances are a symptom of irresponsible behavior. It’s important to discern whether you and a potential spouse have the same values and expectations when it comes to money, and that you practice good money management, like balancing your budget and saving for rainy day funds.

Furthermore, some studies show that delaying marriage at least until partners are finished with their education is beneficial to their future earnings. Also, marriage can have a great return on investment, but only if it is a long-term – not short-term – investment.  Divorce can have terrible financial consequences – so invest wisely.

Couples should not marry for financial security alone, but they also shouldn’t let less-than-perfect bank accounts stop them from marrying. In fact, if Millennials avoid marriage because they lack a golden nest egg, they may be feeding a self-perpetuating cycle. Bottom line: Marriage is the solid economic foundation we lack.

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