From The Straits Times    |

Marriage is a union that lasts a lifetime. You make vows to stay together in sickness and in health and for richer or poorer. And once you recover from the hangover of your wedding, you are hit with reality in the form of bills and payments.

And, while in the past budgeting for yourself was difficult, budgeting and saving with your significant other is infinitely more difficult. To avoid unnecessary friction when it comes to money, here are 9 money tips for newlyweds:

1. Clear Your Existing Debts

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Ideally, you should have cleared all of your debt prior to getting married. But don’t beat yourself up if you haven’t. It’s never too late to start. While you may want to treat your spouse’s debt and yours separately, experts at Stash Wealth (a financial planning firm for millennials and high earners) state that if you think of it as household debt, it becomes easier to put aside funds to clear.

And it isn’t just debt that you had prior to marriage that you should clear. If you took out a personal loan to fund your wedding, this loan amount needs to be cleared too. Clearing existing debt  becomes extremely important especially if you plan to make any big purchases in the near future, such as buying a car or a home.

In fact, when it comes to buying your home, you are bound by the Total Debt Servicing Ratio (TDSR). So, lower debt means that you will be eligible for a higher home loan amount. Moreover, clearing existing debt helps build your credit score which makes it more likely for banks to lend money to you.

2. Decide Your Household Budget And Your Contribution Levels


Many couples tend to avoid conversations about money because it may result in awkwardness at best and fights at worst.

However, for your marriage to work successfully, it is important that
both you and your spouse have an open and honest conversation regarding money. 

If both of you are earning, it is important that both of you contribute towards household expenditure. That being said, your contribution levels cannot be equal. The amount you contribute towards expenses should be based on how much you earn and the existing debt you have.

A simple way of deciding how much each individual needs to contribute towards household expenditure is to first determine each person’s debt obligations. Then, make a list of common expenses. This includes utility bills, rent, groceries, and the like.

Once you do this, assign a percentage to each expense. So, let’s assume that the both of you have decided to contribute 10% of your income towards the payment of utility bills. If you earn S$4,000 per month and your spouse earns S$4,500 per month, your individual contribution amounts to S$400 and S$450 respectively.

3. Do Not Spend On “Unnecessary” Things

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You may think that the only way to keep the romance alive in your relationship is to splurge on a fancy dinner every other week or maybe go on a dream vacation. By doing so, you end up spending money that could otherwise be put to good use. For instance, you could save the money for a down payment for your own home.

On that note, you should also consider buying a home instead of renting one since buying a home works out cheaper in the long run. Renting does seem like the cheaper option in the first few years, especially when you see how much money you need to pay each month to service your mortgage.

However, the major costs (such as home insurance payments and property taxes) tend to reduce over the years, making buying a home a more profitable option than renting one. 

Moreover, at the end of the day, a home is an investment. You are building equity when you buy a home. And if you are worried about making your spouse feel special there are a number of other (and infinitely less expensive, like these romantic date ideas below $20!) ways to ensure there is always a spark in your relationship.

4. Decide on Common Investments And How Much Each Person Will Invest


You know how people say that it takes two to tango? Well, the same goes with investments. Sure, you should have individual investments, but also make investments together.

This begins with determining your risk level as a couple. One of you may be more cautious than the other when it comes to investments. In such cases, make sure that you have a good mix of safe investments such as time deposits and term insurance, as well as riskier high-return investments such as stocks and bonds.

Again, the amount you both invest should depend on how much you earn each month and your current debt obligations. Just like with expenditure, setting a percentage makes it easier for both of you to make significant contributions towards your common investments.


5. Build An Emergency Fund

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Yes, paying your debt is important. As is investing your money. But in all of this, don’t forget to also put aside money for the proverbial rainy day. In general, at any point in time, your emergency fund should contain money that is anywhere from 3 to 6 months of your household income.

This way, even if you are faced with an unfortunate situation (such as losing your job), you still have enough money to comfortably see yourself through that period while you look for another job.

Just like with opportunities, problems (personal, financial, or medical), don’t come knocking at the door. So, being prepared is essential. Here are a few ways you can get started on building your emergency fund:

  • Use a portion of the cash you received for your wedding.
  • Open a high-yielding savings account and put a portion of your monthly income into it.
  • Create a spare change jar. Each time you get change such as S$1 or S$5, put it into the jar, Once the jar is full, transfer it to your savings account.

6. Buy A Term Life Insurance Policy


The sooner you and your spouse by a term life insurance policy, the better. When you are young, the amount you end up paying as premium is lower. Moreover, both you and your spouse are probably in the best of health. So, you won’t be denied a policy or have to buy a more expensive policy due to pre-existing health conditions.

The best aspect of term life insurance, however, is that you can purchase a policy depending on your requirements. So, as newlyweds, you can get a policy that doesn’t have high coverage but provides your spouse with enough protection if anything unfortunate were to happen to you. 

Similarly, as your family grows, your financial commitments change. In such cases, a term insurance policy with a long tenure will provide you and your family with the required protection.


7.  Buy A Health Insurance Policy


Yes, Singapore does have MediShield Life but it’s always good to supplement it with an approved Integrated Shield Plan (IP).
IPs include the MediShield Life component as well as additional coverage and benefits. Like with all insurance policies, purchasing a health insurance policy early means that you end up paying a lower premium.

Additionally, you won’t have to worry about pre-existing medical conditions.

8. Make Use of All Eligible Government Schemes


The Singapore government knows how to take care of their citizens no matter which stage of life they are in. Here are a few of the schemes you can take advantage of:

  •  Family Grant: This is for newlyweds who are looking to buy an HDB resale flat. Only first-time applicants are eligible for the grant. Here’s how much you get:
  • If both you and your spouse are citizens: S$50,000 (2 to 4 room flat) and S$40,000 (for 5 room flats or bigger).
  • If you are a citizen and your spouse is a Permanent Resident (PR) or vice versa: S$40,000 (for 2 to 4 room flats) and S$30,000 for flats that are 5 rooms or bigger.
  • CPF Investment Schemes: If you aren’t using the money in your CPF Ordinary Account (OA) or Special Account (SA), you can invest the money in a wide range of investment schemes. Before you invest you will be required to go through the CPF Investment Scheme Self-Awareness Questionnaire which begins with a training module. Once you have learned basic investment concepts, you can take the quiz to see if you can invest your money!

9. Create A Financial Map for Your Future Together


As a couple, you should have short-term as well as long-term financial goals. While your short-term goals could be a vacation that you are saving for or a car you plan to buy, your long-term goals should include how you intend to save for your children’s tertiary education as well as how to save and how much to save for retirement.

You may think it is a bit too early to start planning for your retirement when you have just gotten married. But, honestly, it’s never too early. Only if you have goals will you be able to create a roadmap to reach those goals. 

A financial roadmap will help you and your spouse prioritise expenditure and it will also give you a fair idea of how to go about reaching your goal. At the end of the day, it is important to remember that there really isn’t one particular way to manage money as a couple.

The way you and your spouse decide to manage money will differ from how your friends and their spouses manage money. The only ground rule is that both of you mutually agree to the rules that you set. From how much each of you contributes to expenditure and investments, to how much you are looking to save. 

Having these little money discussions from time to time will ensure that you are on the right path with respect to your finances, yes. But most importantly, it will ensure that your marriage starts and remains on the right note!


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