Saint Valentine’s Day: The Benefits of Love on Your Budget
Despite all the little snags, relationships are a positive experience for most spouses. Better yet, a study from the National Institute for Statistics and Economic Studies (INSEE) in France proves that it extends life expectancy!
Many Canadians choose to be in relationships. According to data from Statistics Canada, 15.7 million Canadians 15 years old and above were in a relationship in 2011 compared to the 11.8 million people going it alone.
Being in a relationship is not only more enjoyable, but also more profitable. By combining their finances, love birds can save a bundle.
Save Money Living Together
No need to be an accountant to understand that being in a relationship cuts everyday expenses. One major advantage is that it creates economies of scale.
Even though a couple often needs a larger residence, per person rent or mortgage costs remain lower than for singles. We’re not talking about small change: according to Statistics Canada (2010), a person living alone spends $3,600 more per year than someone in a relationship without children.
And that’s without counting household expenses. For a one or two-bedroom apartment, heating bills are practically the same. Whether you are single or in a relationship, there’s still only one monthly Internet and cable bill. Adding a spouse to home insurance doesn’t significantly change payments. Premiums are lower when split between two people.
As far as transportation goes, couples save when they have only one vehicle because they can split purchase, loan, and insurance costs.
In fact, even if you might think that grocery bills are higher for couples due to the extra mouths to feed, this is not completely true. According to the Montreal Diet Dispensary’s data from 2016, groceries cost 20% more per person for someone living alone than for a family of four. And since socially active singles tend to go out to restaurants more often, they can end up with a higher food budget.
Spouses don’t just spend less on their daily lives—they also save more. You can contribute to your common-law partner or spouse’s RRSP until you have reached its limit. This strategy has the advantage of decreasing the contributor’s taxable income, which means lower taxes for the year, even if the funds are invested in a spouse’s account. And that’s a little something that can pave the way for a happy retirement together!
You Can Share Tax Credits
Couples are also in good shape when it comes to taxes. Even if they can’t receive the provincial tax credit for a person living alone, they can transfer unclaimed tax credits to each other. If your spouse or common-law partner doesn’t need to claim certain tax credits to reduce his or her income tax to zero, you can transfer part or all unclaimed amounts to your tax returns to reduce your tax burden.
If you supported a spouse who earned a net income of less than $11,138, you can claim a federal tax credit for dependent spouses, which consists in the difference between his or her total income and $11,138. The government returns the favour to partners who take care of each other.
Avoid Bickering with a Joint Account
Since it is well known that financial issues are one of the main sources of marital conflict, it is important to find solutions for effectively managing everyday expenses and income.
To avoid bickering about money, consider consolidating your income and expenses in a joint account, which also allows you to save on the administration fees for multiple accounts. Do you think that joint accounts are old-fashioned? You will be surprised to hear that they remain a popular choice! At the National Bank, joint accounts make up about 15% of all accounts.
Using a joint account for shared expenses like mortgage payments, insurance premiums, and groceries simplifies managing your expenses.
Some couples may opt for each partner depositing money in their account based on a certain percentage of their income. This approach avoids impoverishing the lower income partner while the higher earner benefits from splitting expenses.
“More than anything else, opening a joint account is based on trust,” says Jean-Simon Goudreau, Product Manager, Payment Solutions at the National Bank of Canada. “Because both partners can control expenses and the funds in the account.”
One of the best ways to ensure financial conjugal harmony is to draw up a family budget. Setting clear parameters for expenses makes it easier for couples to stay disciplined. If you think that it’s about time that you took control of your finances together, read this comprehensive guide.
Considering all the advantages of sharing your life with someone, keeping the spark alive can be a solid investment! On February 14, go ahead and spoil yourselves! Your partnership is worth it!
For more hints and tips about better managing your personal finances, subscribe to the National Bank Newsletter.
Edited on 13 February 2017