How can a Marriage make a Great Divorce?

Do you remember what age you first started thinking about marriage?

Even if you don’t, I am 99% positive that when you were thinking about how great your marriage could be, you weren’t also thinking about how to have a good divorce. How is that even a thing?

In this post you will learn, how can a marriage make a great divorce?

Well, let’s explore it. Shall we?

Let’s kick things off with truths we can all agree on.

What’s the Good News About Money and Marriage

Whether on social media, TV, or in movies, marriage is often described as a union of hearts.

We hear about fairy-tale wedding ceremonies and happily-ever-after lives and witness strong, loving families being built every day.

All marriages (an unhappy marriage & amazing ones) have two crucial sides- the transactional and the relational sides. These two sides ultimately lead us to the “Marriage and Money Paradox.”

Unfortunately, we often don’t give enough consideration to this paradox and how it can redefine “forever.”

This paradox is where love meets financial statements, and you may have to do some hard work you feel unprepared for. In a heterosexual marriage and same-sex marriages, the concept of merging finances upon tying the knot isn’t just traditional—it’s expected.

What’s also expected, and in my opinion, is part of the good news about marriage, is that it comes with multiple financial perks. Most of us probably know this, but if you are unaware, allow me to lay out three major financial perks that come with the institution of marriage in the United States.

Tax Breaks

According to the IRS.gov website, in 2024, the standard deduction for married couples filing jointly for tax year 2024 is $29,200, while the standard deduction for single taxpayers and married couples filing separately is $14,600.

In layperson’s terms, this means that you are financially incentivized to (1) marry and (2) combine your finances on your annual tax returns because it can reduce your taxable income (the amount of your income that is subject to taxes) and lower your tax bills. Most couples consider this benefit a good thing.

Insurance benefits

While not a requirement for small businesses (with less than 50 employees), companies allow their employees to cover their spouses under health insurance programs. Combining coverage under one program instead of covering both spouses individually can reduce the amount of money spent on health insurance.

In addition to health insurance, property insurance carriers view married people as less risky, so lower premiums are typically charged to married people compared to single persons.

Building wealth together

From a financial perspective, this is the best thing about a marital union. Outside of love, family, and romance, we all know it takes money to survive & thrive. So logically, if we consider those two essential things mentioned above, a reduction in taxes and the ability to save money on insurance, marriage presents an excellent opportunity to build.

At the same time, this may sound “ick” because acknowledging the business side of marriage makes you uncomfortable. I’m not diminishing the value of marriage to money; I’m just recognizing that marriage involves math. These financial perks can feel like hitting it big at the slots in a Las Vegas casino—but with higher stakes.

Unfortunately, too many couples, though eagerly welcoming these financial benefits, don’t consider the financial consequences if the marriage dissolves.

So, let’s unpack some of the truths here as well, especially since they aren’t talked about enough.

How Planning a Great Marriage Can Make an Unplanned Divorce Better

In a world where financial security and peace of mind are essential, navigating the choppy waters of money management within a good marriage can feel like a high-stakes game of Monopoly. But a failing marriage can feel like riding a scary rollercoaster at large theme parks. Of course, most of us don’t want to think about the divorce process, but most fail to realize that planning for a great marriage may result in a good, although possibly unplanned, divorce.

First, you have to be intentionally transparent. Conversations about short-term and longer-term decisions must include your goals and visions for your family life. Planning for your financial future isn’t just wise—it’s critical. I can promise you that some compromise is involved, and you don’t want the first time you have a very serious conversation about money to be after you get married.

Here are five steps to ensure you have more financial harmony in marriage.

Action Steps for a Financially Engaged Marriage

1. Transparent Communication

I’m not referring to “talking for the sake of talking.” I mean talking so openly and regularly that you feel naked and exposed. When it comes to money, we have to get comfortable with being uncomfortable—as long as it’s a safe space. Transparent conversations can prevent misunderstandings, allow for real personal growth, and improve your decision-making process.

As you schedule date nights to keep the romance alive, why not set aside time for “money dates”? These sessions can be as casual as discussing budgets over brunch or as formal as meeting with an agenda. The key is to make financial conversations intentional and a regular part of your relationship so you understand where your partner stands when it comes to financial goals, spending habits, saving money, taking on debt, and more. Transparency is key for these dates.

2. Set Up a Joint Budget

Create a budget that accounts for shared expenses and individual spending. One of the best things about modern technology is that there’s no shortage of tools to help you. You decide what tool works best for you. Tools like Empower (formerly Personal Capital), Monarch, YNAB (You Need a Budget), and many others can be lifesavers. It doesn’t matter what tool you pick. It only matters that you USE it.

3. Separate but Equal Accounts

Gone are the days when a joint bank account was the only option. Nowadays, many couples are opting for a “yours, mine, and ours” approach. This strategy allows each person to maintain a sense of financial independence while still contributing to shared expenses.

4. Create a trusted support network

It is crucial to have a solid financial team to help you understand the implications and benefits of marriage for your unique situation. Your team can also keep you abreast of changes in laws and financial regulations that could affect your marital financial plan. Additionally, having the right financial professional and getting sound legal advice is the ultimate power move. It’s the ultimate embrace of vulnerability to strengthen your financial future together.

5. Consider a Prenup

Prenups are not about a lack of trust; they are actually all about trust because you are sharing critical and vulnerable information with your soon-to-be spouse BEFORE you get married. I didn’t make this step last because it’s unimportant; it’s last because it deserves its own section.

So, let’s have an honest discussion about prenups.

The Unspoken Key to a More Secure Future Together

First things first, what is a prenup? A prenup is a legal document between two people planning to marry that outlines how you will handle money during your marriage and then divides it in the event of a divorce. Sounds serious, right? But it’s not all doom and gloom. Creating a prenup can be an empowering process that strengthens your relationship from the get-go. It’s there to protect both parties and ensure a fair distribution of assets if things go south, but it can also be the document that helps you structure your marriage from a financial perspective.

A prenuptial agreement is like a financial seatbelt. But let’s be honest—we aren’t wearing a seatbelt because we WANT to or expect to crash. A desire to get a prenup means you’re being strategically cautious.

Alongside the romance and shared dreams explored in a new relationship, the mere mention of a prenup might feel like a romance killer if you are heading toward marriage. But trust me, addressing sensitive money topics head-on can be a game-changer for your marital relationship.

If prenups are so good, why aren’t they more popular?

I’m glad you asked.

• Taboo – For years, prenuptial agreements were seen as taboo. But times are changing. According to a study by the American Academy of Matrimonial Lawyers, 62% of lawyers cited an increase in prenuptial agreements. However, they still don’t get the credit they deserve.
• Confidentiality – Some prenuptial agreements include confidentiality clauses that prevent the couple from discussing the terms of the document with others, so there’s not much they can share.
• Impact on Marriage Rates – While I think it’s rare, some couples decide not to proceed with their marriage after going through the prenuptial process. Younger generations are waiting longer to marry, and there may be some fears that the already declining marriage rate will continue. However, my rebuttal is twofold. (1) If a couple decides not to get married because they don’t feel financially compatible, then that’s not a bad thing (2) What if an increase in prenups could be the thing that helps to continue to lower the divorce rate because couples improve their chance of staying married. Talking about finances openly and honestly with your partner can help you understand each other’s financial habits, goals, and potential red flags. This transparency can build a solid foundation of trust and respect, making your marriage even stronger.

Before you enter a serious relationship, clearly understand your financial goals and boundaries. Knowing what you’re bringing to the table and what you expect from a partner allows you to set the stage for financial equality before the marriage license is signed.

The other reason prenups are not popular is because most people genuinely don’t understand them. Can we bust the myths associated with prenups?

Prenups don’t jinx your marriage.

• Reality – Statistically speaking, getting a prenup does not tip the scale towards your marriage ending in divorce, so the idea that it jinxes a marriage is based more on feelings than facts. Even though they are seen as a plan for failure, the bottom line is they do just the opposite. In reality, they’re just another form of financial planning with the benefit of potentially keeping you out of court should you divorce.
• Reality – Pre-nuptial agreements often get a bad rap as unromantic or distrustful. What’s more romantic than showing your partner that you’re thinking about your future together in the most practical way possible?

Prenups are not just about divorce

• Reality – You can use a prenup as a financial guideline to help manage finances in your marriage. The U.S. has a divorce rate of about 45%, and although it is not the highest divorce rate in the world, it’s still significant. What are some of the top issues that lead to divorce? Money, but of course! So, if you’re aiming for a low conflict marriage or even a low conflict divorce, a prenup is a tool that can help with that goal. You get to make very informed decisions about money and property during the prenup process.
• Reality—Marriage is not just a romantic union; it’s a significant financial partnership. By understanding the incentives and potential consequences, you’re establishing an informed foundation for your future together. Remember, approaching marriage with both hearts and heads aligned is the best strategy for sustained happiness and financial stability.

Prenups aren’t only for rich people

• Reality – Prenups are for anyone who wants to ensure that their financial future is secure. It doesn’t matter if you have significant wealth or come from different worlds. A prenup can also address future earnings and assets even if you don’t have substantial assets today.
• Reality – Some couples with significant assets choose one spouse to remain a stay-at-home parent/spouse, leaving that partner in a vulnerable position without the proper protections. A prenup is a way for the stay-at-home spouse to better secure their financial future during & after marriage. A prenup can protect both partners from unforeseen debts and financial obligations. It can outline who is responsible for which debts, protecting you from your partner’s financial liabilities. However, any disposition that would leave one spouse in poverty and on public assistance is generally not enforceable, so those one-sided prenups you hear about are pretty rare.

Regardless of the number of divorces or marriages you’ve had, a prenuptial agreement can save a lot of heartache and money down the road. It can be the unspoken key to a secure future together.

Speaking of multiple marriages, let’s talk about that as well.

First Marriages vs. Second Marriages

Second marriages often come with more life experience and, consequently, more financial wisdom. However, they also bring complexities like blending families and managing existing financial obligations. In second marriages, it’s even more crucial to protect assets and clarify financial responsibilities. Doing this on the front end will result in less time negotiating, improving your emotional well-being.

Considerations for second marriages:

Blended Finances – How will you manage finances with children from previous relationships? What are the expectations for merging households, and who will be responsible for them? Prenups safeguard individual assets and family inheritances intended to stay separate property.

Estate Planning – Ensure your estate planning reflects your current wishes and protects all loved ones. Ensure that your beneficiary information and any estate documentation are up-to-date, and remove references to your former spouse (as your settlement agreement allows).

What’s the benefit of Financial Transparency in Marriage

Financial transparency is about laying all your cards on the table, from student loans to secret shopping sprees. The goal? To build a foundation of trust and eliminate any “money surprises” that could throw your relationship off-balance. The last thing that a spouse wants is to be surprised by some crazy financial secrets that can turn your great marriage into a bad marriage.

Financial transparency is about laying all your cards on the table, from student loans to secret shopping sprees. The goal? To build a foundation of trust and eliminate any “money surprises” that could throw your relationship off-balance. The last thing that a spouse wants is to be surprised by some crazy financial secrets that can turn your great marriage into a bad marriage.

Financial transparency allows for clarity, protection, and peace of mind, allowing you to focus on building a happy, healthy relationship.

If you want to help make your money conversations less awkward, starting with transparency early in the relationship is essential. Similar to the divorce process, the prenup process requires you to be financially transparent.

The Overlooked Financial Consequences of Divorce

Divorce isn’t just emotionally taxing; it’s financially draining. When you say “I do,” you’re also saying “I do” to your partner’s financial situation—debts, assets, the works. Furthermore, you’re saying I do to your state’s laws on assets and liability splits unless you have a prenup that says otherwise.

Here are some financial land mines to watch out for during a divorce:

• Division of Assets: Splitting assets isn’t as simple as slicing a cake. You could end up with much less than you think you are entitled to.

• Alimony and Child Support: These short term/long-term obligations can seriously impact your financial stability. Note: A prenup cannot outline child support obligations.
  

• Legal Fees: Divorces are expensive, for most people. The average cost of a divorce in the U.S. ranges from $15,000 to $30,000, according to LegalZoom. Since all states offer no fault divorce, these numbers have very little to do with who’s at fault.

• Lifestyle Changes: Adjusting to a single income after years of dual-income living can shock the system.

Wouldn’t you rather have conversations about these topics while you’re still in love and have your partner’s best interest at heart versus when it’s been decided that your marriage is over or that you can’t stand being in the room with them?

Time for Action

Marriage and money don’t have to be at odds. By redefining what marriage means when it comes to your finances, you can build a loving and financially stable relationship.

While finances and prenuptial agreements might not be sexy topics, they’re certainly one of the most important. Taking the time to transparently plan and discuss your financial future can make your marriage stronger and more resilient. And if the unexpected happens, having a prenup in place can make life smoother and a divorce less contentious.

Hopefully, I have reinforced that marriage is both a beautiful partnership and a financial contract. And now you better understand how a a great marriage and a good divorce are connected. By understanding the financial implications and preparing for any eventuality, you can ensure that your marriage, or even your divorce, is financially savvy.

Ready to take control of your financial future and break the taboo of money and marriage? Join FIIRM Heros like yourself. Sign up for the FIIRM Hero Newsletter Community to connect with us.

Your future self will thank you.

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