I’ve mentioned the Boglehead forums here before – a place
where disciples of Jack Bogle can gather and discuss life and their shared
passion for low-cost index funds. On the forums you can find perspectives on almost
anything related to personal finance, and one particular thread on the
economics of marriage caught my eye.
This was a few months back, and I unfortunately can’t find the exact
thread, but the poster wanted to discuss the net benefits and net losses of
entering into marriage. Honestly,
my first thought was “wow, what a weirdo”, but it’s actually an interesting
question. On a side note – I do
have a friend who’s generally uninterested in getting married for love, but
would consider it as a business arrangement. Certainly, it’s been done many times throughout history, and
plenty of people are benefiting financially from their unions.
The majority opinions on the thread, which seemed to be made
up of bitter men lamenting the loss of 50% of their savings due to divorce, was
that marriage was a risky gamble – A 50% chance of losing 50% of your
assets? Even if the other 50%
chance involves equally excessive gains, that sucks. We’re risk-averse, and the pleasure of gaining $X isn’t felt
as powerfully as an $X loss. Of
course, that logic is of dubious usefulness – your statistical odds of divorce go
down with age and education. But
as I’m constantly reiterating to clients – a test involving many
people/stores/restaurants can be read with high statistical significance given the
action has an impact on whatever you’re measuring, and there is a large enough
sample size. Yet as soon as you
take a look at any individual – all bets are off. Any number of things can occur at an individual level.
.
.
So the consensus among the Venn diagram intersection of
divorced people and practical/frugal/internet-dwelling peoples is that marriage
is a risky proposition. At the
same time, choosing a partner for life is undoubtedly one of the biggest
financial decisions you’ll make, and the value of the right person is
astronomically high. Warren
Buffett’s friendship with Bill Gates is chronicled with some detail in a
biography I recently read- the unlikely beginning, the progression, Buffett’s
pledge to give a substantial portion of his money to the Bill and Melinda Gates
foundation. At one point, Gates
proposes to his then-girlfriend Melinda French, secretly flies her to Omaha
where they pick out a ring at Buffett’s Helzberg Diamonds, and then everyone
plays poker. And Buffett notes
that he thinks Bill and Melinda getting married is fantastic – it’s a smart
choice, because Melinda is smart and fantastic. Buffett, a man who understand the value of money, understood
that a choice in partner contributes significantly to your financial
health.
The moral of the story? If you ain’t to punk, holla we want prenup! But really, isn’t it crazy how hard it is to unpack big life decisions and decouple them from money? And now, I’m going to throw out a really terrible analogy that will make you question my humanity. If investing in specific companies, you want to go for a business that has high-value underlying assets, with a great vision/idea and an intelligent workforce, one that you expect will create value for the world, and get noticed. Shouldn’t you be with someone who you expect great things from, and who will push you to get the best returns on your investment in yourself?
The moral of the story? If you ain’t to punk, holla we want prenup! But really, isn’t it crazy how hard it is to unpack big life decisions and decouple them from money? And now, I’m going to throw out a really terrible analogy that will make you question my humanity. If investing in specific companies, you want to go for a business that has high-value underlying assets, with a great vision/idea and an intelligent workforce, one that you expect will create value for the world, and get noticed. Shouldn’t you be with someone who you expect great things from, and who will push you to get the best returns on your investment in yourself?
"Shouldn’t you be with someone who you expect great things from, and who will push you to get the best returns on your investment in yourself?"
ReplyDeleteAnd yet, lots of people don't marry for money. Men, especially, often fall for other qualities in their partners :)
I do think that money does play some role in choosing a partner. The details depend on cultural standards, personalities, etc.
This reminds me of a lovely saying: "don't marry a man because he is rich, but look for a husband among rich men".
Interesting quote. Definitely agree that so much depends on cultural standards. From my vantage point, there's nothing necessarily wrong with marrying for money (except for my hesitation that I could have a truly equal partnership given such an imbalance). But on the other hand -- I feel really confident in my ability to provide for myself (assuming good health, knock on wood). So that means in some ways, I'm lucky that money's not the central narrative. =)
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