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The Mystery of Cohabiting

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One study finds cohabiting before marriage negatively impacts finances

by Chris O’Shea

According to a study from the Pew Research Center, the number of couples who cohabit before getting married increased by 29 percent over the last decade. That’s not surprising, considering that people often consider living together a sort of “trial run” for marriage. What is interesting is that research has shown couples who cohabit before marriage have less wealth than those who don’t live together before getting hitched.

A study from Iowa State University that was published in the Journal of Financial Planning found that cohabitors had lower net worth and fewer assets than couples who never cohabited before getting married. Not only that, the more times a couple cohabited before marriage, the larger the gap in wealth with non-cohabitors became. The report found that first-time cohabitors had an average of $26,927 less in wealth and assets than non-cohabitors, and those who had cohabited multiple times had an average of $33,809 less in wealth than the couples who had not lived together prior to marrying.

Researchers behind the study theorize that one of the main reasons cohabitors have less in wealth and assets is that they focus their finances on items that don’t build wealth, such as furniture and cars. Move in together more than once and you’re outfitting another new place each time.

Still, the reasons people choose to live together (or not) are plentiful, so it’s difficult to gain much insight from a single study. The most important takeaway from this report is that couples should discuss exactly why they want to cohabit prior to marriage. During that discussion, couples should also frankly discuss their finances and long-term financial goals. Keeping the lines of communication open right from the get go will help couples avoid potential pitfalls down the road.