[Editor's Note: I received what now appears as the Pro section of this piece as a guest post from George Diaz, who blogs at SobreDinero.com, a Spanish language personal finance blog. George is obviously bilingual and sent a nice post reflecting on some of the lessons learned as he and his girlfriend moved in together. However, I felt like there was something missing from the post, and since Pro/Con posts are very popular around here (and usually controversial) I thought it would be a good time to jot down a few of my thoughts on the subject. So I did the Con section. We have no financial relationship.]
PRO
Cohabiting Has Numerous Financial Benefits – George Diaz
If you're in a formal relationship and you've been thinking about living with your partner, it's important to take into account some important points before you make the plunge. To give you some context, I had been with my girlfriend for nearly eight months when she proposed the idea of living together. Now, you may be thinking that eight months isn't a long time, but we live five minutes away from each other currently, and spend time with each other at least five days a week. From an informal poll of about 5 couples I know, this is higher than average, so I figured eight months is almost the equivalent of a two year relationship in terms of time spent.
Anyway, I was pretty sure she was “the one” and we even discussed the idea of marriage at that time, but both agreed that it's probably was too soon. (Though we were well into our 30s). So although she asked me to consider moving in with her, I told her I needed more time before making a decision of this magnitude and I took the following issues into consideration:
More Time Spent Together
Now, again, we had spent an inordinate amount of time together already, but being around someone first thing in the morning, and last thing at night 24/7 is something we rarely did. On one hand, we enjoy each other's company so I don’t anticipate the increased time spent together being an issue.
Trial Run For Marriage
On the other hand, there may be a couple of minor things that irritate me now, and vice versa, and I wondered if these minor issues would now become major ones. For example, I snore. She hates it. She's an early riser and doesn't require a lot of sleep but will it make her resent me if she doesn't get enough sleep? Conversely, she is in the bathroom seemingly forever. I like to get plenty of sleep and can usually be ready for work in 30 minutes or less. I figured that my routine was sure to get disturbed if I'm waiting an hour for the bathroom to be free every morning.
Now this may ultimately be a good thing as this can serve as sort of a trial run for marriage, as we experience each others' quirks and good/bad habits over an extended period of time. Neither one of us have offended each other egregiously and would probably never do so, but who knows? Time would tell if the little things become big or if our respective love for each other can look past seemingly minor inconveniences. Either way, it's better to know now before you exchange wedding vows.
Financial Responsibility
Now, this will obviously vary from couple to couple, as both partners may not be working full time. In all likelihood, one person is going to make a bit more than the other, or in some cases drastically more than their partner. I make a bit more than my girlfriend, but she is more frugal and so it balances out. I also have considerable debt from grad school so technically; she is worth far more than I am.
We have an agreement that we should contribute towards expenses in proportion to the amount of income we generate. In other words, if I make 30% more than she does, then I should pay 30% more of the expenses. We like this rule because it deals with proportions rather than absolutes. Rather than being tied to a number, we are holding each other to percentages, proportions, ratios etc. Therefore, if either one of our incomes dramatically decreases due to job loss, or conversely, increases, we will always be carrying our fair share of the weight.
Half The Cost, Twice The Fun!
With that being said, since our respective incomes are relatively equal, I am looking forward to the potential savings! If you've ever traveled with friends, you know the feeling of being able to split up costs of hotels, dinner, and even activities among several participants rather than having to foot the bill yourself. This is exactly what should occur in a fairly equitable partnership.
Both of our rent contributions will dramatically be reduced as we can consolidate our living accommodations under one roof. Now, we still had to figure out whose place we're staying in because we both loved our respective apartments but I'm sure we'll come to a compromise. This could be a huge point of contention if either one of us owned our respective apartments. Worst-case scenario, both partners are under a mortgage they can't easily get out of. This is just one of the reasons why I don’t believe in home ownership unless certain conditions are met but that's for another article like this one.
Now, with that important caveat aside you should expect savings on rent, groceries, commuting, appliances, electricity, phone, cable etc…Depending on your current expenses, the savings could potentially be enormous.
Do Great Minds Think Alike?
While the savings benefits are certainly excellent, you have to now be mindful of the fact that you are making decisions for two. Legally, you are not sharing half your assets and liabilities just yet (unless you plan to sign a prenup), but you should certainly be in the mindset of thinking for two. After all, poor financial planning can end up being an enormous burden on your marriage as issues like poor credit, overspending, or personal debt can come back to haunt a marriage for many years to come and breed resentment.
I won't get in to details but just keep in mind that now is a good time to get in the habit of learning to compromise as there will inevitably be disagreements on your respective needs vs. wants. For example, she loves antique furniture and expensive artwork. I would much rather spend the money on a leather couch and a giant TV. Let's just say we had to compromise. I got my leather couch, but she got artwork. Again, won’t go in to detail but check out some unique perspectives from WCI forum participants on engagement finances.
Disadvantages
Now I have so far painted a pretty rosy picture of what to expect. It's not all fun and games to be sure. The change I noticed after several months together was that our sex life had become somewhat stale. We would find that we were either too tired from work, not in the mood, or too busy to have sex whenever we saw each other. This is obviously understandable as the frequency with which we interacted certainly increased, but the drop off in how frequently we had sex was considerable.
It took both of us realizing that we still needed to find ways to keep a spark in our relationship in order to keep things fun. For example, we have date night at least 2x/month where we will get dressed up and have a night out on the town. We also do staycations in the city if we can’t afford to travel, but want to get out of the house. Inevitably, there will be certain aspects of your lives that will now become routine, but the point is that it's important not to get lazy and to mix things up so as to ensure that your relationship remains strong.
These are just a few of the considerations to keep in mind as you transition from lovers to “livers,” and perhaps even decide to one day marry each other. It has certainly been worth it and I have no regrets about living together as it is excellent preparation for marriage. After all, if you're planning on spending a life together, what better way to really get to know someone? Let us know your thoughts and personal journeys in the comment section!
CON
Stop Playing House – WCI
There is no doubt that I am a traditionalist, a conservative, even a curmudgeon on this subject. I'm certainly an advocate of marriage, and not just for personal, religious, and cultural reasons. Studies show married people have a higher net worth (at least if you stay married, and of course correlation is not causation.) However, as I read the above article I had several very non-P.C. thoughts run through my head-
“Why buy the cow when you get the milk for free?”
“Stop playing house!”
“Yea, having a roommate helps you save money.”
As you can tell, I'm not a fan of cohabitation, but that rests primarily on the moral implications of it. This is not really a religious or a political site though, so I'm going to do my best to point out only the financial implications of both short term and long term cohabitation. We probably also ought to limit the discussion in the comments section to financial topics only.
Cohabiting Only Saves Money Because You Didn't Have a Roommate Before
Let's start with the obvious. The only reason there is a big cost savings with cohabiting is that neither George nor his partner were “doing it right” previously. If they each had a roommate they were already splitting costs with, there would be no additional savings by swapping roommates. Many of the economies of scale available to cohabiting partners and even married couples are no different from that experienced by roommates. Yup, now you have two incomes to pay the rent, utilities, maintenance, and furnishings. Plus, you can ride together when you go places. I guess partners get to sell one of their beds and they don't have to pay the transportation costs to go see one another, but that's about it.
You Don't Have To Live Together To Plan A Financial Life Together
George makes a big deal out of planning their financial life together. I think it is great that he is having these discussions with his partner. I think they are very important discussions. We had them also before marriage. But we didn't have to be under the same roof or even in the same bed to have them. “Practicing” this stuff before marriage is overkill. It isn't that big of a deal to meld your finances once you are married. Like a prenuptial agreement, the main purpose of any financial agreement prior to marriage is to protect the interests of each partner from the other partner!
Pregnancies Have Profound Financial Implications
Probably the biggest financial issue with cohabitation doesn't even require cohabitation-having children. Now, kids are great; we have four little rug rats ourselves. But I've got news for George- your lifestyle barely changes when you get married. You want a big change? Have a kid. Now you have a “roommate” that is not contributing to “the pot,” who carries all kinds of additional expenses, and not only reduces the amount of time and energy you have for “productive economic activity,” but also profoundly affects the relationship between partners. In addition, you have legal, financial responsibilities after having a child that last for the next 18 years. No matter what happens with the relationship, you're going to be paying for that kiddo for the next couple of decades. Now, I know that people get pregnant without living together, that same sex couples generally don't get pregnant unintentionally, and that birth control exists and is reasonably reliable. But I think it is a very small step to go from being a “roommate with benefits” to being a “parent without benefits” (i.e. the legal protections of marriage.) This is obviously less of a big deal in a short-term cohabitation situation where you get married eventually than it is in a long-term cohabitation situation or one in which the relationship breaks up after pregnancy occurs.
[A brief side note: The whole “milk/cow” thing, while meant to be a clever and lighthearted way to deal with an awkward subject is probably offensive to many. It really refers to the fact that a relationship break-up after pregnancy has more of a financial impact on the person who is actually pregnant- she has insurance co-payments, she is the one on maternity leave, she is the one more likely to miss a promotion/hit a glass ceiling, she is the one who has to either breastfeed, pump, or (potentially) feel guilty about not doing so etc.]
Finances in Limbo
Another major financial issue with an extended cohabitation period is that the period of time in which your finances are in limbo between totally separate and fully joined is prolonged. I think in marriage it is a mistake to have “his money” and “her money” (or these days, “his money and his money” etc.) Once you're married and committed, it should be “our money.” Now, it's fine (and recommended) to have some sort of allowance where you can spend a certain amount of money without having to justify it to your partner, but all the income goes into one pot and all the expenses come out of that same pot as the two of you agree. But when you're cohabiting, you're in this limbo land. You're kind of committed to each other, but not really. And your finances tend to reflect that. You come up with some kind of agreement like George's, or one person pays the rent and the other buys the food or whatever. It ends up being kind of weird and often leads to resentment that the other person either isn't earning enough or isn't contributing enough to the household, especially when other problems in the relationship crop up. Long term relationships are hard enough without financial issues. It is best to get rid of as many financial issues as possible and that means getting out of limbo land ASAP. If you REALLY want to “play house,” have completely joint finances.
Just kidding, don't do that- the risks are simply too high. I mean, if you have joint financial accounts, that partner can clean you out and disappear, taking all the assets and leaving the debt and there is little you can do about it. It's a bit like buying a house with someone you're not married to. The transaction costs on that are way too high for such an unstable social situation. Wait until you're married before buying a house together. If one of you owns a house, just have the other partner pay them rent and keep all finances separate. Of course, have a written, signed, enforceable, “renter's contract” (sounds romantic huh) as to who pays what and how that might change if incomes change. You don't have to enforce it, of course, but if you need to, you can. If you want a joint checking account for convenience, fine, but maintain your own separate ones and have your paychecks deposited there.
Long Term Issues
There are a few more issues that come up when it comes to long-term cohabitation. First, beware if you are in a state with common law marriage. (AL, CO, DC, IA, KS, MT, NH, RI, SC, TX, UT and if it has been a very long time, GA, ID, OK, PA.) Contrary to popular belief, living together for seven years doesn't necessarily make you “married.” You actually have to hold yourself out as married by telling people you are, sharing a name, filing joint tax returns etc. But you can think of a scenario where a previous partner decided to take you to court over this. One way to protect yourself is to both sign an agreement that states something like “Jane Smith and John Doe agree as follows: That they’ve been and plan to continue living together as two free, independent beings and that neither has ever intended to enter into any form of marriage, common law or otherwise.”
Next, realize that you lose the legal protections of marriage. That includes in most states the right to make decisions for your incapacitated partner as the next of kin, but you can get around that with a health care power of attorney and a “regular” power of attorney. You also don't qualify for alimony when/if you split up, no matter what career sacrifices you made for the relationship. Divorce is financially devastating, but splitting up a long-term cohabiting relationship, especially with children, isn't usually significantly better.
There are estate planning implications also. You don't get to use your spouse's estate tax exemption for instance. You'll also need to have a will/trust specifying that your partner gets your stuff (and kids if they're from a previous relationship) if you die, otherwise your next of kin may be in charge.
There are asset protection issues as well. In my state, your homestead exemption doubles if you're married. In other states, married couples qualify for “Tenants by the Entirety” titling of their property.
Social Security also treats cohabitating couples differently. You can forget about survivor's benefits and spousal benefits.
In summary, cohabitation is a risky financial endeavor, not some financial windfall. Protect yourself accordingly.
What do you think? What financial tips do you have for cohabiters? What is the best way to arrange financial affairs for short-term and long-term cohabitation situations? Comment below!
It’s charming to watch WCI try and hide his scruples!
I never know what to make of stats about cohabitation. I guess I think of them like stats about single motherhood- in general single mothers are poor, but all the single moms I know earn in the mid six figures and it was all planned. I guess the thing to consider is if you are undertaking these endeavors for the same reasons as the majority of the people in these studies, or if your background, education, and finances are different.
Of note, Utah excepted, conservative parts of the country have higher divorce rates than the coasts. So maybe don’t get married unless you live in Utah or a blue state!
It’s hard to drill down on these things…
Completely agree with the marriage penalty issue for two high income earners. My now husband and I co-habited for 6 years and did not marry until we seriously planned to have a child (for which marriage is still not a necessity). We never thought of co-habitation as a trial run and planned our lives and finances as if we are a permanent couple. We bought a house under both names, opened investment accounts jointly, etc. Marriage as an institution just did not have any personal meaning to us. Now that we are married for 5 years, I can attest that our behavior and thinking as a couple has not changed merely due to being married (having a kid is another story of course). We always had “his money and her money”, but contribute together to common expenses and investments, and are well on our way to being able to retire by 50. This did not change one bit as result of the marriage, and we were never in financial limbo prior to marriage.
Part of the reason we did not marry earlier is the tax penalty. We are both physicians and the year after our marriage is the first year in which we had a tax payment instead of two (smallish) refunds, to the tune of $22K! This is a concrete financial hit yearly and not hypothetical potential future loss. I can see some of the con’s in terms of very long term co-habitation for losing estate planning, social security etc, but it seems to make sense for two high earners to delay marriage for sometime in terms of tax savings. How long that time probably depends on the couple. Probably doesn’t work for everyone, but can be an advantage to some.
Regular reader of the website and this rubbed me fully the wrong way. The “pro” section does come off as simplistic and slightly immature (but at least had an excited sweetness to it). WCI your section, while it was well written and contained some salient points, smacked of moralization despite your caveats that you were going to steer clear. Your metaphor about the cow/milk is disgusting, antiquated and frankly sexist and the attempted rationalization regarding pregnancy does little to alleviate that. You are under no compulsion to listen to my advice but as a long time supporter who frequently refers others to your site I am disappointed.
Thanks for your valuable feedback.
Gosh, I have to agree, I find this post disappointing.
I cohabit with my SO. When it was clear we were very serious we sat down and made a forever commitment. It was just the two of us, and whether we chose to include some type of God in that discussion is our own business. Then we got to work on the nitty-gritty; decided not to get married right away (didn’t make sense, two high earners, different loan situation, bad time for the family) but planned out loan payments, kids, how we would care for elderly parents and made a solid investing personal statement. We opened a joint banking account and made each other our emergency contacts and beneficiaries. Then he moved in.
No one’s playing house here, we were committed, wanted to spend as much time together as possible in this short life, and the type of birth control involved is the same for if we were married or not, since it’s not time for us to have kiddos.
I know I should have a thicker skin, but I feel bummed to find out there’s a bunch of people out there who view me as a wanton cow who just couldn’t wait to give up the goods. This milk wasn’t free – it required commitment, dedication and paperwork – but I guess you see it that way since I don’t have a piece of paper or a hunk of metal on my finger.
Someday not too long from now we’ll have a big party, I’ll wear a nice white dress and we’ll get our families together and have a wonderful celebration about how much we love each other and it will be official. But until then I ask that many of you tone down the moral judgments based on married/not married status, We’ve met many married couples that have made far less commitment than this cohabiting couple.
I don’t think you can discuss marriage without discussing morality or politics. Depending on your beliefs marriage is a religious and/or a legal construct. Marriage does not exist in nature though many animals in the wild cohabitate. Strictly in the financial sense marriage is a losing proposition. the odds of walking away with a big financial hit are very high 50% for the general population and apparently 25% for physicians. When removing religion, politics, or morality out of the equation cohabitation is a no brainer. When you add emotions, parents, grandparents, friends, religion and politics into the equation you end up with issues that make the math fuzzy or less important.
If you go by strict math, don’t get married and if you do sign a prenup. I can’t think of a single self induced greater destroyer of wealth than an ugly divorce.
I disagree it is a no-brainer. That’s why I wrote the Con side. I think there are a lot of financial aspects involved.
Longtime reader and huge fan of the site, but I really raised my eyebrows at this one. I doubt a single reader will change their cohabitation/non-cohabitation plans based on this post, nor do I think any should. A financially savvy couple that communicates well together about money matters will do well regardless of whether they cohabitate or marry first, and a less savvy couple will not do well regardless of which path they choose. Ultimately the decision will be made based on non-financial personal/religious/cultural/societal reasons (as it was for both George and WCI), which is how it should be. The comments posted thus far show that people clearly can do fine financially either way.
Thanks, WCI, for all you’ve done! You have changed my life and been a huge inspiration.
Am I the only one that had to google “cohabitation”?? I’m trying to understand the reason for this specific terminology for people living together. How is this different from roommates?
Cohabitation implies the roommates are sexual partners. It’s not only a shorter way of saying “roommates with benefits” but generally implies a more significant commitment to each other.
whoa, is this toofache of Double Barrel and A Dope does… fame??
A cynical legal friend says “The only thing I can get if I marry, which I can’t get staying single, is A DIVORCE.” That’s the one who got a vasectomy as a single guy.
It would be interesting to hear from someone thats been thru the cohabitation situation and ended up NOT continuing into marriage. Anyone?
Married the second person I cohabitated (is that a word?) with. Cohabitation with either partner markedly reduced expenses. One clear difference between room-mate and co-habitation with regard to cost is that at the post-college stage of life, a room-mate requires more bedrooms in the home, but with cohabitation we could share the lower cost of a one-bedroom apartment. Basically this cut the housing cost in half, some reduction in utility cost and not much change in food costs.
Didn’t marry the first one, got engaged but fortunately dodged the bullet (though financially he would have benefited me, higher income earning physician and with significant family money, oh well!). Living together did probably help us figure out that we were not compatible and thankfully we figured it out pre-wedding, so we didn’t have to deal with wedding and divorce costs. Now almost 14 years married to a more freely-spending and lower income partner and will attest that finances can be a challenge with different financial styles, but living together pre-marriage did help us understand our financial compatibility, as we sorted through how we managed joint expenses. We spent cohabitation and the first few years of marriage with separate finances and income-proportional contributions to household expenses, now have a joint account that we both contribute to for household expenses and separate accounts for discretionary spending (or saving).
This might be weird to people who grew up in one or two kid families, but roommates can share bedrooms. I have shared a bedroom with another individual for at least 36 of my 41 years. I might have had a brief respite those first 5 years before my brother was born. I can’t recall if that first house was 2 bedrooms or three, but I think it was three and I had a nursery all to myself while my older sisters shared the other bedroom.
Sharing a bedroom when you’re an adult puts a real crimp in your dating/sex life. It’s also super uncomfortable to go back to sharing a bedroom with someone you’re not sleeping with after you’ve had your own place and realize how peaceful it is to have some space to call your own.
I don’t disagree. It’s also uncomfortable to go back to spending less money. But when you never know the difference because you’ve never done it any other way…
I’m probably older than most of your readers..(now in my 60s)..I’ve recommended your website almost daily to residents and med students. Your financial advice is spot-on, IMO.
I’m torn on this topic of marriage/cohabitation. I survived (barely) an ugly divorce almost 20 years ago (spouse left, I raised a child by myself, rebuilt financial situation from a net worth in negative numbers). I miss the companionship. I don’t miss the conflict.
The (obvious to me) answer is to “marry well”…defined as someone who has a good moral and financial framework in their life. The problem is discerning who will/won’t be who they appear to be….in 5-15 years…..
I can tell you it’s extraordinarily devastating to find a spouse has cleaned out your accounts, and then to be forced to pay alimony because you’re a “high-earning physician”. I went from a net worth of nearly $1M to nothing in a couple of years.
Now….it’s extremely difficult to convince myself that marriage is “worth it”, although my personal moral/religious viewpoint is aligned with WCI .
Proceed with caution…
I am in my 60’s also. Fortunately, I understood the law and protected myself from the law. Here is what the law looks like to me:
Beggar Psychology and Family Law Psychology
There are some important differences, but at one level, one can get a fairly good idea of the psychological aspects of the marriage entitlement ideology by considering a man begging on the street. Suppose that every day for 365 days, man A passes the beggar and gives him nothing and man B passes the beggar and gives him one dollar. On day 366 both man A and man B pass the beggar without giving him anything. It is an extremely good bet that the beggar is angry at man B and not man A. Despite the beggar having his standard of living improved for 365 days by man B, the beggar gives man B little appreciation. Instead, he is angry at man B because the beggar’s standard of living drops by one dollar when man B stops giving. In the beggar’s view, man B is responsible for a drop in the beggar’s standard of living.
The family law psychology is eerily similar to the beggar psychology. Consider man A and man B, both of which have substantially higher incomes than a woman. Suppose that man A will not marry a woman because he does not want to share his higher income with her. Suppose that man B is willing to share his higher income with her and he marries her. Every day that the marriage endures, man B is increasing her standard of living. Despite the woman having her standard of living improved during the marriage, the woman gives man B little appreciation. If a divorce ensues, the woman’s standard of living would decrease dramatically if man B no longer shares his higher income. In the law’s view, man B is responsible for a drop in the woman’s standard of living. But, whereas the beggar cannot force man B to continue supporting the beggar’s standard of living, the law can force man B to continue supporting the woman’s standard of living. If, even after the law’s intervention, the woman perceives that her standard of living has decreased, it is because not enough is being transferred from man B to her.
It may take a bit longer to find financially successful women, but currently there are plenty of them. Biologically, men can afford to be patient. Keep beggar psychology in mind and avoid good deeds per:
https://smolyhokes.blogspot.com/2018/01/marriage–no-good-deed-goes-unpunished.html
If there is a disparity in assets and/or income, cohabitating is safer to protect assets.
Marriage Entitlement Ideology – No Good Deed Goes Unpunished
[Crude comment removed]
https://smolyhokes.blogspot.com/2018/01/dont-think-with-your-dick-valuable.html
Do not value women solely for their youth and beauty. The important things are the things that endure. Youth and beauty are waning assets. Think also about important things that endure. Don’t marry solely for waning assets. Shared values, the ability and inclination to communicate rationally, and the willingness to compromise are going to be more important for the long term.
Apparently, women need to be protected from “power inequalities” in marriage and their “bounded rationality.” ( Prenuptial Agreements and the Presumption of Free Choice: Issues of Power in Theory and Practice, by Sharon Thompson page 167 https://www.researchgate.net/publication/309847645_Prenuptial_Agreements_and_the_Presumption_of_Free_Choice_Issues_of_Power_in_Theory_and_Practice) The most logical way for women to protect themselves from “power inequalities” and their irrational behavior would be for the women not to marry men that had such unequal power. The trouble is that women seem to prefer men with high status, income, wealth, and power. Attorneys try to protect these women from their “bounded rationality,” by making it uncertain that a prenuptial contract will be binding. This protection, of course, comes at the expense of successful men. Thus, successful men should protect these irrational women from “power inequalities” by not marrying them. (That is, don’t think with your dick.)
Because of “marriage entitlements,” if a financially successful man does not marry a similarly financially successful woman, he should beware the mantra “no good deed goes unpunished.” As will be explained below, the more good deeds a successful man does, the more the law will punish him. For simplicity, and because she gets her entitlement whether she has his children or not, assume that the marriage endures for ten years or so and that there are no children.
Consider three different options for a financially successful man (there are other options not listed):
Case A: Similar Financial Status
If a financially successful man marries a similarly financially successful woman, he is relatively safe from legalized plunder. Basically, there is no net transfer of marital wealth between the spouses during the marriage or in a divorce. A high standard of living is possible, along with high savings and investment, when both spouses have comparably high incomes.
Case B: Dissimilar Financial Status with a Prenuptial Agreement
If a financially successful man does not marry a similarly financially successful woman, there will be a net transfer of wealth from the husband to the wife during the marriage. The married man sacrifices the higher standard of living and the higher savings and investment that he would have had if he had stayed single. Conversely, the married woman gets both a higher standard of living along with higher savings and investment than she would have had if she had stayed single. In a divorce, there are lower savings and investment in case B than case A. Assume the savings and investments are split evenly between the spouses. For the husband, compared to staying single, after divorce he has lower savings and investment. For the wife, compared to staying single, after divorce she has higher savings and investment.
What does the prenup do for him? A prenuptial agreement can help minimize (hopefully to zero) any transfer of income and/or wealth after divorce.
Case C: Dissimilar Financial Status without a Prenuptial Agreement
Case C is almost the same during the marriage as Case B. That is, if a financially successful man does not marry a similarly financially successful woman, there will be a net transfer of wealth from the husband to the wife during the marriage. The married man sacrifices the higher standard of living and the higher savings and investment that he would have had if he had stayed single. Conversely, the married woman gets both a higher standard of living along with higher savings and investment than she would have had if she had stayed single. In a divorce, there are lower savings and investment in case C than case A. Assume the savings and investments are split evenly between the spouses. For the husband, compared to staying single, after divorce he has lower savings and investment. For the wife, compared to staying single, after divorce she has higher savings and investment.
The big difference between case C and case B is that the woman expects a transfer of income and/or wealth to her even after divorce.
If a woman will not even communicate and negotiate what she needs in a prenuptial agreement, how can one expect good communication and compromise in the marriage? An unwillingness to negotiate and a “take it or leave it” ultimatum on getting married without a prenuptial agreement is a power play that shows total disregard for the man’s concerns.
No Good Deed Goes Unpunished
In case A, the man is not making any financial sacrifices due to marriage and thus the law sees no “good deed” and thus will not even attempt to punish him in a divorce. Not only that, but women generally do not see the man in a bad light.
In case B, the man is making a financial sacrifice due to marriage and thus the law sees a “good deed” and will attempt to punish him to the extent that the prenuptial agreement can be circumvented. The law, and women generally, will give the man no credit for the financial sacrifice he made for the marriage. There is a negative sentiment that he is not a good guy because he should have simply trusted her and not negotiated a prenuptial agreement. Instead, women will complain about “power inequalities” and being “forced” to sign a prenup that attempts to stop a transfer of income and/or wealth after divorce.
In case C, the man is making a financial sacrifice due to marriage and thus the law sees a “good deed” that needs to be punished. Furthermore, because he trusted both his wife and the family law system, the law sees more good deeds that the man has done and will punish the man even more harshly than in case B. Because he trusted family law, family law will force him to provide her a marital lifestyle entitlement and will attempt to go after even premarital assets in any way possible to satisfy her unmet “needs.”