Diversified Thinking

A great deal of research documents that married people are financially better off than singles. Apart from having a lower tax rate for “married, filing jointly,” married people enjoy other advantages: pooled living expenses, shared shelter, greater employment benefits, lower insurance rates, and so on. But one significant advantage is psychological.

What I mean is this: in most relationships one partner tends to think long-term and the other short-term. Long-term thinking entails planning for retirement or saving for education; short-term thinking involves investment opportunities or new job prospects. Both types of thinking are necessary: long-term thinking requires you to plan for the future, while short-term thinking enables you to capitalize on current opportunities.

Relationships are often about compromise, in big and little things. When you live with someone who doesn’t think the way you do, you have to adapt. When married, a short-term thinking partner is less likely to act impulsively and chase fantasies. At the same time, the long-term planning spouse isn’t as liable to get stuck in a rut of low expectations and small futures.

This may be one reason why the best predictor of poverty is whether the person is a single parent. Having the obligations of parenthood without the resources of a couple—financial, emotional, and psychological—is a daunting prospect. And those psychological resources—having another way to think about money—are especially important.

Douglas R. Tengdin, CFA
Chief Investment Officer
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