Home Ownership

Does marriage improve a couple’s finances?

marriage improve a couple's financesTying the knot comes with understanding your future spouse-to-be’s personal finance habits and goals, ideally before marriage. From managing credit, loans, assorted debt, insurance policies and merging bank accounts, there’s lots to financially prepare for.  Weddings can be costly, and in Canada,  costs average around $20,000 for the Big Day. Many couples finance their weddings through a combination of family contributions, gift fund registries, and loans. Some add personal savings to celebrate what will be one of the most important days in their lives. Yet, what happens after a couple says their “I Do”s?

Married couples get exclusive tax benefits

The CRA assesses federal income taxes of married couples differently. Even though you each have to file separate returns, married couples can receive deductions through a non-refundable tax credit on Line 303 of your CRA tax return, typically on a T4.  You can claim this credit if you offer financial support to a spouse earning less than $11, 474 a year.

Two can be as good as one: joint banking and spousal TFSA accounts

Nowadays, both financial institutions and the Canadian government offer products to couples who’ve gotten hitched or live together as common-law partners. A joint chequing account makes managing mortgages, utilities, groceries and other shared expenses a breeze. Much like a regular chequing account, most joint accounts require a minimum balance (usually between $3,000-$5,000) for unlimited withdrawals or waived monthly fees. Spousal TFSAs have competitive interest rates that increase when you make and keep high deposit amounts within them. Unlike TFSAs,  RRSPs are not shareable. However, if one spouse holds higher retirement savings than the other, then consider making spousal RRSP deposits.

Insurance policies: home, auto and supplemental health plans

Doing a survey of who has better coverage policies for home, auto, life and health insurance can save you thousands of dollars a year.  You may even wish to merge all of your plans to one provider. If both spouses drive and own cars, consider asking your insurance provider for multi-car and/or carpooling discounts. Life and health insurance can be negotiated through joint plans. It’s always best to apply and shop around for quotes when you’re young and healthy; insurance companies offer more affordable rates to young policy holders. For home or renter’s insurance policies, adding your spouse as a beneficiary and additional coverage to your plan can help protect sentimental and everyday valuables.

Having a partner in debt

Debt doesn’t transfer from spouse to spouse, even after death, unless you’ve co-signed (or are a guarantor) to a loan. The only time a partner’s financial health is relevant is when you’re both applying for a joint mortgage. Having bad credit can impact interest rates, affordability and pre-approvals when you start house shopping. Overall getting married doesn’t increase your chances of getting a loan. However, maintaining good finances and budgeting wisely for expected and unexpected expenses can do you a lifetime of good.

  • BaseTend Inc

    Great read! Double income doesn’t mean double savings! Thank you!