NerdWallet's Smart Money Podcast - Marriage and Money Myths — and Why the Economy Feels 'Off'

Episode Date: February 20, 2025

Understand the financial pros and cons of marriage, from taxes to credit scores, and how it impacts your future. Is the economy as bad as people think it is? How does your spouse’s credit and debt affect your finances? Hosts Sean Pyles and Elizabeth Ayoola discuss marriage and money to help you understand the financial implications of tying the knot. But first, NerdWallet Senior News Writer Anna Helhoski interviews Eugene Ludwig, chair of the Ludwig Institute for Shared Economic Prosperity, about why traditional economic data may not accurately reflect the financial struggles of middle- and low-income Americans. They explore how unemployment statistics overlook underemployment, why inflation feels worse for lower-income earners, and how policymakers could improve economic measurement tools. Then, NerdWallet Personal Finance Writer Lauren Schwahn joins Sean and Elizabeth to break down the financial side of marriage. They discuss how taxes work for married couples, whether getting married affects your credit score, and how to protect your finances when one partner has significant debt. They also cover estate planning advantages, health care decision-making, and strategies for managing money as a couple with different financial backgrounds. How to dispute credit report errors to get mistakes or outdated information off your credit history: https://www.nerdwallet.com/article/finance/dispute-credit-report  In their conversation, the Nerds discuss: marriage and money, financial benefits of marriage, marriage tax penalties, combining finances, marriage effect on credit score, debt and marriage, should I get married for financial reasons, estate planning for couples, joint bank accounts pros and cons, student loans and marriage, how to protect finances in marriage, marrying someone with bad credit, mortgage and marriage, how to talk about money before marriage, economic perception vs reality, cost of living vs wages, how inflation affects real wages, and CPI accuracy. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

When you think of all the reasons to get married, what comes to mind? Dream weddings, tax breaks, sometimes love too. Well, this episode we help a listener figure out if marriage is worth the effort and cost. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. This episode, we're talking about some of the more nuanced financial implications and benefits of marriage.

But first, our weekly Money News Roundup, where we break down the latest in the world of finance to help you be smarter with your money. Listeners may remember way back last fall when there was a lot of talk about economic vibes and how they didn't seem to match up with what national statistics were telling us about the economy. I am a listener and I will say I was also confused by the mismatch between musing shared in my social networks and the economic data that we were presented with. Yeah, lots of economic indicators were indicating that things were going pretty swimmingly, but polls kept showing that the public did not agree.

Our news colleague Anna Hilhasky is here with more, and Anna, there really has been this huge disconnect between perception and reality when it comes to the economy. There has, Sean, and that's why an article that I read last week in Politico grabbed my attention. The author argues that people's negative feelings about the economy were actually spot on and that the government's stats on unemployment, wages, and growth were wrong. So for today's episode, I spoke with that very author, Eugene Ludwig, chair of the Ludwig Institute for Shared Economic Prosperity, who also

served as the U.S. Comptptroller of the currency during the Clinton administration. Eugene Ledwig, welcome to Smart Money. Anna, it's nice to be with you. In your article for Politico, you say that you're skeptical that the government's measurements of things like unemployment and wage growth are capturing the realities of the economy. So before we get into what your team of researchers found, I'm curious what led you to dig into the divide between what stats show and what the economic, for lack of a better word, vibe seemed to be. Well, it's really a two-part, Anna.

I've either walked by, ridden my bicycle by, or been in a car passing by the Federal Reserve since I came to town here in Washington over 40 years ago. And the buildings are just as pretty as they were when I arrived. The only thing that's changed is the increasing homeless city of tents, which didn't even exist when I first came. And there were some people sleeping on grates, maybe occasionally, but now it's like a tent village around the Federal Reserve. So you see that and you say, hey, what's so good about these numbers?

Tell you everything ought to be better. And things aren't better when you when you actually physically see them and touch them. So all of that led you to assemble a team of researchers who found that for some 20 years, voter perception was, quote, more reflective of reality than the incumbent statistics. That's quite a statement to make. Can you explain what your team found was accurate and inaccurate in the data? The Bureau of Labor Statistics, which comes out with most of these statistics that are used by the Fed and others, is a hardworking bunch of folks that capture data more or less

accurately. They do a good job and of collecting information. But in creating these headline statistics, they take the raw data and they put it together on the basis of definitions that were locked in in the 1930s. And they were based on concepts of the 1890s. So that you have definitions that made sense in the 1930s that don't make as much sense today. For example, virtually everybody had a full-time job or no job. Today, there's a lot of part-time. That really influences the data. We found that in all the headline statistic areas.

So you wrote in your piece that, quote, those living in more modest circumstances have endured at least 20 years of setbacks. And the last four years did not turn things around enough for the lower 60% of American income earners, end quote. So if public opinion is a reliable gauge of objective economic conditions, and most of the public has suffered 20 years of setbacks, then I was curious why Gallup's economic index

was much higher during the first Trump administration, that is after the Great Recession and before the pandemic, than it had been in 2004. And if we've seen a 20-year period of economic decline, wouldn't we expect economic confidence to have been lower toward the end of that period than it was at the beginning of that period? Well, the economics over a 20-year period obviously themselves fluctuate during that period somewhat. And of course, they vary depending on location in the United States.

So there are some areas that have been hit even harder than the median. I actually think that the decline has been going on for a longer period of time than 20, 25 years. But the reliable statistics we were able to find were really a 20, 25 year timeframe. And the weakness, as I say, is definitional, but the definitions tend to leave out the fact that middle and low income Americans

have been experiencing a different reality than upper income Americans. So in your article, you make another pretty startling claim. If you adjust the unemployment stats about one in four are functionally unemployed in the U.S., can you explain that a bit? If you look at the unemployment statistics that the BLS puts out, what it doesn't do is have any reflection in those numbers really for the degree to which people are working part-time and want

to work full-time and whether or not they can earn a living wage. What we look at is, you know, can people earn above a poverty wage? And if you filter the numbers for I'm working but I can't earn above a poverty wage or I'm working but I'd love a full-time job but I can't get it. So you basically create a bucket of what are really functionally unemployed and we call this the unemployed bucket. It's really dreadful. Twenty-three percent of the American people are functionally unemployed.

That is those that we're told have only a four-ish percent unemployment rate. It's worse for black Americans and worse for women. Aren't the measurements that you're talking about something kind of distinct from unemployment? Part-time workers have jobs and so do full-time workers who earn low salaries. It is fair to say, Anna, that, well, yes, I've got to, as one of my friends in New York, Pennsylvania used to say, a piece of a job. But in terms of what I think people think of as being, oh, they're employed, so they're kind of okay, they're on the ladder upwards, or at least a ladder they can put a roof over your

head or have a decent meal. They're not on that ladder. I think you explain why the American people have been so upset that as middle and low income income Americans because their reality is not good and getting worse. Let's dig in a little bit about part-time work. The number of Americans working part-time because they can't find full-time work is near historic lows, and that's despite the US population being historically high. Census Bureau data allows for respondents to give a reason for their work status, and the majority of those who work part-time do so by choice. That's what they say.

So I'm looking at two recent periods. Federal data measuring involuntary part-time work show that there were more involuntary part-time workers in December 2019 than in November 2024. And yet, public approval of the economy was higher in December 2019 than it was in November 2024. And yet public approval of the economy was higher in December 2019 than it was in November 2024. So what's the explanation for why voters like the economy in December 2019 versus November 2024? The big influencer, I think, of public attitude had to do with the increase in prices so that the real wage they were earning was actually down.

The nominal wage may have been up, but the real wage was down. And you say, well, how could that be? Because if you look at government statistics and you use the CPI, which is a normal inflator that's used, you'd think wages would be up a little bit over that period of time. In fact, up about 3%. But that's not reality because for the lower 60%, in fact, what's happening is that the basket of goods and services they buy that need to survive on food, housing, education, that has inflated more than the CPI.

And so in fact, they're not up 3%, they're down 3%. And that's painful. It's painful for people who barely have enough money to put a roof over their head to begin with. And about wages. In your article, you say that data shows the median wage is just under $62,000 annually. But then if you include part-time workers and unemployed job seekers, the median wage is just under $62,000 annually. But then if you include part-time workers and unemployed job seekers, the median wage is about $52,300 annually. So that would

mean that the median worker actually earns 16% less than the stats would indicate. Right. And you add into that the inflation adjuster, which has been used by the BLS which is not as meaningful for middle and low-income Americans and use the real adjuster which is what are they buying what are they really need which is greater and they're in really a big hole. And as you said the consumer price index that's the CPI which tracks all the costs of goods and services in the economy isn't telling the whole story of inflation can you talk a little bit more about that? Well the CPI is a costs of goods and services in the economy, isn't telling the whole story of inflation. Can you talk a little bit more about that? Well, the CPI is a basket of goods and services of about 80,000. It's a useful statistic as

a general picture of the economy generally, but it is not a meaningful statistic really for middle and low income Americans because most of that 80,000 goods and services are things that don't touch middle and low income Americans at because most of that 80,000 goods and services are things that don't touch middle and low income Americans at all. What they're concerned about are the goods and services that really matter to them. And if you look at that basket of goods and services, it is inflated more than the CPI.

And it's inflated so much so that there's a meaningful gap that creates a negative improvement for them. In other words, they're not an improvement. Things are going downhill for middle and low income Americans economically. So when it comes to perception, is the disconnect between stats and how people feel really more about inflation than anything else rather than the actual stats that the government is putting out there? That was the big story over the last four years. But generally, it's more complex than that because

in a sense, all the government stats have misleading implications when we're dealing with middle and low income Americans. GDP, which net-net does give us a sense of whether the economy is growing or not, whether wealth is being created or not, we would think, for example, gross domestic product means product being produced domestically. That is production. But, in fact, that's not what it means. It means really wealth creation, not whether things are actually being produced here shorthand for more jobs. Worse still, while it gives us a sense that there's an even-handed sharing that's going on,

in fact that's also not what the GDP is when one digs into it. It doesn't necessarily mean that middle and low-income Americans' well-being is growing, it just means the economy's wealth is growing. So in terms of how one looks at these headline statistics, if one's not going to dig into the details, one gets I think a misleading picture of how well things are developing for middle and low-income Americans. Overall you say something needs to change to give people a more realistic perception of the US economy. What does that change

look like to you? Well there are a number of different ways one can make the change. One thing that you could do is basically take the statistics we've come up with and substitute them for the headline statistics. They could become the new headline statistics. Or alternatively, they could be published alongside the current headline statistics, which would give policymakers a better picture of what's really happening in the economy. The reason we're doing this is we're hopeful that policymakers, this is really a bipartisan effort, left, right, whatever, have an accurate picture of the economy they're dealing with,

and therefore will make more informed decisions as to what policies they want to pursue. All right, Eugene Ludwig, thank you so much for joining us today. Thank you, Anna, it's nice to be with you. And thank you, Anna. Thanks, Sean. Up next, we're gonna answer a listener's question about some of the more nuanced financial implications

and benefits of marriage. But before we get into that, a reminder, listener, to send us your money questions. Maybe you're trying to figure out how to better your credit so you can buy a home this year. Or you need some help figuring out which financial goal you should prioritize. Either way, leave us a voicemail or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD.

You can also pop us an email at podcast at nerdwallet.com. And we want to talk with more of you live on Smart Money this year. So if you want to hang out with Elizabeth and me and get some nerdy wisdom, let us know. One more time, leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. Or email us at podcast atdwallet.com. Now, let's get to this episode's money question. That's coming up in a moment.

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What are some of the more nuanced financial implications and benefits of marriage? My partner and I have already established we want to spend the rest of our lives together, but haven't gotten serious about planning a marriage. We do want a ceremony someday, but with no intention to have kids and no traditional pressure from family slash friends slash selves to have marital titles, we look at it as mostly a financial decision and struggle to understand the ins and outs. We both work and earn in the 22% federal income tax bracket and take the standard deduction so I don't see tax benefits. My employer allows my domestic partner to enroll in my health insurance, so that's not a perk. My main apprehension has to do with debt and

credit. I have excellent credit and minimal debt. My partner was a victim of an awful scam many years ago that led to credit card default and charge-offs that haunt their credit report despite being over seven years old. They were recently even denied for a secured credit card. Furthermore, they have nearly $200,000 in student debt that may never get paid off. Considering that, I view marriage as a liability for my own credit, debt and ability to borrow money in the future, which is necessary for both of us. Am I misguided? Are there other financial consequences I'm not recognizing? Thanks, Bailey.

So to help us answer this listener's question on this episode of the podcast, we are joined by NerdWallet personal finance writer, Lauren Schwann. Welcome back to Smart Money, Lauren. Hello, thank you. Let's start by talking about what Bailey mentioned about marriage and taxes, because the alleged tax breaks are a big draw of getting married for some couples. So firstly, Shawn, can you break down

what people should know about this? Yeah, you're right. A lot of people think that getting married is this great way to save on taxes, and for some folks that's really not the case. The big things to think about are combined income and tax brackets. When you file your taxes as a married couple, the income threshold for the marginal brackets is much higher, so your combined income may be taxed at a lower rate than what you would have been taxed at as a single filer. And I realize this can get kind of confusing, so let's use our listener situation as an

example. Bailey said that they and their partner are both in the 22% tax bracket. For single filers, that bracket is between roughly $48,000 and $103,000 for the 2025 tax year. For married couples filing jointly, the 22% bracket range is between roughly $97,000 to around $207,000, so it's basically double. Since our listener and their partner are both in the same tax bracket, the larger range for that 22% tax bracket for married couples doesn't amount to much in terms of savings on a tax bill for them. Getting

married would be more advantageous tax-wise if one partner earned much more than the other so they could take advantage of those larger tax brackets. And another thing to note that Bailey pointed out is the standard deduction. For couples who file jointly, the standard deduction is double that of single filers. And while that might sound really exciting, it ends up being kind of a wash when you break it down on an individual basis. So like Bailey said, getting married may not be a huge advantage tax-wise. Thanks for breaking that down, Sean.

So Lauren, you're the only one who is married here. Did getting married change your and your husband's tax situation much? I don't remember the exact details. I just know it didn't change too much at that point. What I remember most is that we messed up adjusting our withholding after we got married, so we ended up owing more than we expected after filing, so heed my cautionary tale. Yeah, growing pains as a young married couple. So getting married can have big implications for a range of aspects of your finances including things like social security benefits and how you save for retirement. But I want to touch on two that come to

mind for me. Healthcare decisions and your estate. When it comes to healthcare when you're married you become the default decision maker for each other's healthcare decisions in the event that one of you is incapacitated. And this happens without having to get a medical power of attorney, which can be a kind of drawn out and sometimes expensive legal process where you might probably have to get an attorney involved. It's just not super easy. So this can be a huge advantage in a health emergency. Instead of having to pull out some paperwork to prove that you should be in the

room with your partner and that you can make the health care decisions for an incapacitated partner, you are just accepted as being in that role. Again, think about what that might mean in some kind of crisis. You want to be there to support your partner without having to dig through documents. And then when it comes to your estate, being married can make it much easier to transfer each other's assets upon death, something that folks might not want to think about, but you'll be happy to have that sorted out in the event that that happens. Absolutely. So, Lauren, it sounds like this listener's partner experienced something really terrible with their finances a few years back, and they're still trying to recover from that. But even if the listener and their partner do get married, the credit issues that the

partner is dealing with won't port over to the listener's profile, right? That's right, and I know there are a lot of myths surrounding what happens to your credit when you get married, so let me set the record straight. There's no such thing as a joint credit score or a credit report. Credit files are unique to each individual's credit history, so you're not going to inherit anything from a spouse's record. The only time that your partner's credit might impact your own is if you apply for a credit card or a loan together in the future, then that information would

appear on both of your files. But that's also going to be the case whether or not you're married. One other thing is depending on where you live, it's also possible that if your spouse refinances an existing, say, student loan after you're married, that could open you up to liability, but that's not usually the case. I want to say something about the scam situation that the listener's partner experienced real quick. It's important to know if you've been the victim of a scam and there's a negative mark on your credit report because of it, like in the listener's case, a charge off, which is when you have an unpaid account that your creditor writes off as a loss. Instead of waiting for the mark to fall off your credit report several years down the road, you can and should dispute that with the three major

credit bureaus to try and get it corrected as soon as possible. And the same goes for if you see a negative mark that's been there longer than you think it should. So legally, most negative marks have to come off your credit report after seven years. And I don't know if the listeners partner maybe already tried disputing that information, but if not, it's a good idea. So that's my public service announcement. Thank you for that. That's super important. And a lot of people aren't aware that they can dispute information on their credit reports or they may not know how to do that. We have articles on NerdWallet that walk you through this process because it's a little bit different with each of the three credit bureaus. So we will link

in our show notes two articles that can help people understand how to dispute errors on their credit reports. So Lauren, is there any way that getting married could limit our listeners ability to qualify for credit in the future if their spouse does have a pretty rough credit record? It is possible. Again, it's going to come down to whether they decide to apply for credit jointly or separately. If they get married and apply jointly for, let's just say, a mortgage, lenders will look

at things like the couple's credit scores and reports and also their debt to income ratio to assess their risk. So if lenders see that your partner has a high amount of debt compared with their income, or if their credit is in really rough shape, that could make it harder for you to get approved or get good terms. All right. So I want to zoom out a little bit and talk about just managing money as a married couple. Even though our listener and their partner earn about the same amount, it seems like

they have very different financial circumstances. Lauren, how do you think they should go about building the financial future that they want to have together, considering what each person is bringing to the table? Well, it's great that they've already shared details about their financial situations with each other, so hopefully they won't run into any surprises there. I think that's a really good start. I think it's also important for them to talk about their financial goals and expectations so they can make sure they're on the same page. And then from there they can decide how to prioritize those goals and whether they want

to manage their money together or separately. For example, we know the listener's partner has student debt. The couple might want to talk about whether they should both contribute to the payments and possibly pay it down faster or if they want to have the partner continue to pay it on their own. pay it down faster or if they want to have the partner continue to pay it on their own. So Lauren, as we mentioned earlier, you are married. So how did getting married change your financial life? Did you have any like, why did nobody tell me this moment or things that you didn't expect? You know, our financial situation wasn't that complicated. So there weren't a lot of major changes at first. Neither one of us brought any debt into the marriage. We kept our own credit card accounts open.

And we're also renters, so we haven't gone through the home buying process or anything. But I think the biggest change for us was that we opened joint checking and savings accounts so we could officially combine our income. And that just made it so much easier for us to pay our bills and to save up for our goals without having to figure out how much each person needed to contribute or having to send money back and forth.

And also being able to get on each other's health plans was a really big plus. I would say if there's anything financially that I didn't expect about getting married, it's maybe that I'm just not as stressed about money as I thought I would be. I know this sounds like a really cheesy cliche, but my husband and I have always been a good team. We share the same values, we've supported each other, and we're both pretty responsible with money. We both work in the finance world,

so I think that's been a huge help. So it's not like I expected necessarily that a switch would flip and we would suddenly start fighting about money or anything once we got married. But I also knew we were going to make some bigger financial decisions like having kids and thinking about managing those added costs for me was just a little bit scary.

But it actually hasn't been too stressful in reality because I've had someone else to share that load. So I'll give you one example. We bought our car right after we had our first kid, and we just decided to have my husband do everything, put it in his name because I didn't have to bring my newborn along to the dealership so it was a lot better that way. And my husband's also just really on top of little things like he calls the garbage company to sort out our auto pay issues with our bill and he has taken a lot of those what I find

annoying tasks off my plate. You have to play to each person's strength in a relationship. That makes it a lot easier to manage household stuff and finances. So something else I'll add because from Bailey's original email to us, I've gathered that they're in a queer relationship. And, you know, we're living in, shall I say, very uncertain times right now. And there are some signals that gay marriage may be challenged at the Supreme Court. So for peace of mind alone, for people like Bailey and myself, frankly, getting married to the person that you plan to spend the rest of your life with may be worth it for that sense of security and stability that marriage can bring. My partner and I are planning on getting married this year,

and for a long time we approached marriage much like Bailey and their partner. It wasn't really a priority because we weren't on that traditional path that is expected of more heterosexual couples traditionally. But we want to build a secure life together and marriage just makes that so much easier across a range of areas of your financial and personal life as we've laid out earlier. Alright Lauren, can you share some thoughts about how couples can help support each other financially for anyone listening out there? I think it's a good idea to check in with each other every once in a while and just

be honest about how things are going. Couples might want to talk about whether they're making progress toward their goals, if there's been any changes in their financial situation, and also just address how they're feeling. Because I think obviously the numbers and detail side of managing your finances is important, but the mental and emotional side is really important too. And then there are a lot of ways you can support your partner, even if you keep your finances separate.

You might just wanna be a cheerleader for them, or you can help them research a problem that they're having, or share resources. Maybe you've used an app to track your spending and you really like it and you can recommend that to your partner. So there's definitely a lot you can do and just ask, see what kind of support they need and then deliver where you can. Well, Lauren Chuan, thank you so much for joining us.

Happy to be here. Thank you. That's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the nerds and call or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Visit nerdwallet.com slash podcast for more info on this episode. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts and iHeartRadio to automatically download new

episodes. This episode was produced by Sean and Tess Viglent. We had editing help from Pamela de la Fuente and Hilary Georgi. Megan Mauer mixed our audio. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and it may not apply to your specific circumstances. And with that said, until next time, tear into the nerds. Today's episode is supported by Amazefit. For those who crave adventure as part of their lifestyle, but don't let it define them, meet the Amazefit T-Rex 3, the ultimate ready-for-anything adventure watch. Whether you're hitting the trails or saying yes to that spontaneous night skiing invite,

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