Financial Planning Tips for Newly Married Couples in Singapore

When you say, “I do,” you’re saying yes to a lifetime of commitment in sickness and health and also for richer or poorer. Managing money as a married couple differs from when you were single. When you’re single, all you had to think about were your own needs and wants. However, when you’re married, you and your partner share the bills and need to provide for your children as well. Are both of you drawing a salary? Are you living with your parents? Do you have kids or are you planning to have kids? The answers to these questions will play a part in determining how you manage your money as a couple.

Money, or more precisely, marital arguments over money over money are more problematic, recurring and remain unsolved despite more attempts. According to the Prudential Relationship Index, children, money, and housework were the main sources of arguments among couples. Here are a few suggestions on how to manage your finances as a married couple while keeping the peace.

Come Clean About Your Finances

Being truly transparent about your finances with your partner should have happened before tying the knot. However, there’s no time like the present to discuss your debts and loans, as well as your income, investments, assets, and other financial obligations i.e. ageing parents, alimony or child support.

For any type of debt, discuss whether you want to tackle it individually or as a couple. Student debt may be seen as an individual debt while the mortgage is shared. For those with mounting credit card debt or personal loans, consider using a debt consolidation plan that suits your needs in terms of repayment period (typically 1-8 years), interest rate and processing fees. Debt consolidation plans are commonly for debt that is more than 12 times your monthly salary. To illustrate this, here’s a comparison between paying the minimum balance of two credit cards versus the HSBC Debt Consolidation Plan assuming you have a debt of S$50,000 and you earn S$3,000 per month.

Thus, your minimum payment would be S$1,500 a month which is half of your salary. Plus, you’ll be paying S$12,750 per year only in interest and it’ll take over 10 years to pay off your debt! Now, if you managed to apply and get approved for the HSBC Debt Consolidation Plan payable over 8 years with a flat interest of 3.5% and an EIR of 6.5% per annum, your payments would look like this:

With the debt consolidation plan, the monthly payment will be S$670 instead of S$1,500 and you’ll save over S$80,000 in interest alone! Talk to your partner about taking these steps because it proves to them that you’re working towards paying off your debt. Paying off your debt in a timely manner could also help to bump up your credit score.

Contrary to popular belief, your credit score will not be influenced by your spouse’s credit score. Each person maintains their own credit score unless you both decide to open a joint account or apply for a supplementary card. Find out more about credit for couples in Debunking 3 Common Credit Myths: Couples Edition.

Are You a Spender or a Saver?

Find out what your partner’s spending habits are like. Are they impulse spenders who spend when they’re upset or are they penny pinchers, not wanting to spend on anything and only buying the cheapest items? Knowing your partner’s spending behaviour is important because a lot of disagreements can come from just assuming they’ll do what’s ‘right’.

Questions to ask your spouse to determine how they think about money include:

• How did your parents spend money? Were they frugal or generous?
• Did you have a monthly budget and did you spend within the budget?
• Have you ever discussed finances with your parents?
• What is your greatest fear when it comes to money?

Your partner's responses will play into your marriage and help you understand how your partner manages their finances. You’ll need to answer these questions too, so that both of you understand each other’s concerns when it comes to money.

Separate Bank Accounts

Some couples may prefer keeping their accounts separate and allocating who will be responsible for specific monthly expenses. One benefit of keeping separate bank accounts is having a sense of control and independence, according to the the University of California. Although your accounts are separate, make sure you have a joint tracker which could be an expense tracking app you both use in order to see what’s been paid and what’s pending.

Try Spendee Budget & Money Tracker (iOS), an app that allows you to sync your online banking and e-wallets all in one place along with draw up budgets plus, it allows you to share it with your partner! For couples who are POSB (iOS) or DBS (iOS) account holders, their digibank app actually has some budgeting features which you can utilise. Known as NAV planner, the app pools your data from your DBS or POSB account along with any assets and expenses like CPF, properties or investments to show you an accurate representation of your finances.

The main drawback of managing your finances separately is that there is a higher chance of miscommunication which could result in late payments or even paying for something twice. Communicating what’s been paid and when it was paid is very important, along with whether you can or cannot pay for something.

Sharing a Joint Account

Opening a joint account has its perks because for some couples, it’s just easier to pool your money together and make payments with that. Things to consider when signing up for a joint account is choosing one that offers a better interest rate (some may offer up to 3.88%+ per annum), low fees, mobile payments, and any linked credit or debit card that gives you cashback when you spend on household expenses. Joint accounts help to promote accountability between spouses and improves communication as well. If both of you earn about the same income each month, it’s perfectly fine to calculate the expenses and then split it all in half. However, if there’s a large salary difference, consider allocating expenses according to percentages.

Allocation of Expenses to Total Take Home Salary

Thus, for partner A, they’ll contribute S$1,200 per month to the shared monthly expenses of S$3,000, whereas partner B contributes S$1,800. That being said, do note that it’s highly unlikely for both parties’ spending to be equal, so make the time to have a discussion about how much each partner needs to contribute to prevent any squabbles. Not all joint accounts are made the same. A joint-alternate account is where any account holder can perform bank transactions without the other person being notified. This also means that it’s possible for one account holder to borrow money without the knowledge of the other person, hence making them liable in the event of default.

A joint-all account needs all account holders to acknowledge banking transactions before execution. So, when one account holder withdraws money or issues a cheque, the other must also authorise the transaction before it can go through. Find the perfect joint account here.

Hybrid: The Best of Both Worlds

Having a joint account and maintaining a personal one is another popular solution. On one hand, you’re both able to take care of household expenses with the joint account and on the other, you won’t feel guilty about spending on yourself from your own account. This creates a balance where you both feel like you have some independence while managing your shared expenses as a couple. It could feel tedious, transferring the agreed upon amount into the joint account every month but it’s as simple as setting a direct debit payment and forgetting about it. So, sit down and have ‘the talk’ with your partner. Detail each and every expense you both have as a couple and decide how you’d like to manage your money – joint, separate or a hybrid of both – and also how to tackle debt.