Money After Marriage: How You Can Manage Your Personal Finances After Getting Married

This article was written in collaboration with Manulife (Singapore) Pte. Ltd. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

The most important decision you make in life will likely have nothing to do with your money or your career – it’s the choice of your life partner.

Don’t just take it from us. Investing legend Warren Buffett also thinks that marrying the right person “will make more of a difference in your life”.

It’s not hard to see why. After marriage, managing your personal finances may no longer be so personal. Building a life together, plans for your own financial goals may evolve into shared financial goals as a couple. Having a supportive lifelong companion will not only give you the greatest chance to succeed financially, but also spur you to embrace new experiences and opportunities.

Communication Is Key to Building Trust

Talking about money, even between couples, can be a sensitive topic. For a start, it’s common for spouses to have differing views on how money should be saved, spent and invested. Disparities in financial literacy, earnings, debts, and family responsibilities (i.e., having to support elderly parents) can further complicate discussions.

Similarly, couples need to have their financial goals and priorities aligned for the best chance of success. For example, you may want to retire early, while your spouse is eyeing more space with a larger (and more expensive) home, or even want to start a business. You may end up working in opposite directions.

Being honest and transparent with one another from the outset will set strong foundations for discussing differences and finding common ground. On the other hand, a lack of communication may lead to nasty financial surprises – sowing the seeds of distrust and resentment in the relationship.

Budgeting For Household Expenses

There’s no running away from daily household expenses that you’ll start incurring. This is a partnership, and you need to decide how to split expenses.

First and foremost, it’s important to draw up a monthly budget so you can track exactly what you’re spending on and how much you’re spending. While doing this, you should include yearly expenses, such as insurance premiums or subscription services. During this process, you can also identify expenses that can be trimmed without impacting your lives.

This will also set the basis for how you divide your household expenses. Some common ways include splitting bills equally or proportionally based on your income.

It can also be based on responsibilities to pay for the bills, especially if it adds up to the amount you agreed to split. For example, one spouse can take care of all utilities-related expenses, such as electricity bills, water bills, internet and phone bills, while the other spouse pays for groceries and dry goods.

You can also deploy certain money hacks after this. Opening a joint savings account can give both of you access to your monthly bills – and better interest as you pool together your savings. Depending on what you’re spending on, you can apply for the right credit cards.

Creating Shared Financial Goals

One of the first things that couples discuss, possibly even before marriage, is where they are going to live. For most couples, buying a BTO flat is the entry-level (and most affordable) option. There’s little cash outlay as you can use your CPF Ordinary Account (OA) savings to pay off your downpayment and monthly instalments. You can also rely on housing grants if you are eligible.

Combining your emergency funds, worth 6 to 12 months of your monthly expenses, can strengthen your financial security. Invariably, if one of you gets retrenched or has unexpected medical bills, it will significantly impact both spouses.

You can also start savings buckets for other near-term goals, which may include personal luxuries (e.g. a new golf club set or a branded handbag), a couple’s trip and other entertainment purposes.

Pooling financial resources also helps you make more prudent decisions. You can double down on paying off any high interest rate debts, such as credit card loans, personal loans, or student loans. In a high interest rate environment today, paying these off as soon as possible can save you a tidy sum of money. Moreover, you will also alleviate a potentially significant stressor in your relationship.

If you plan to have children, you may also want to start saving up for their education. Since this may be nearly two decades in the making, time is on your side – especially when it comes to investing this pot of money.

Another long-term plan is how you are going to hop off the rat race together. Whether you’re aiming for early retirement or intending to work well into your silver years, you need to plan for your own retirement adequacy. While your CPF contributions will ultimately go towards providing lifelong monthly payouts via CPF LIFE, this may only cover the bare necessities, and may not be enough to achieve your ideal retirement goals. This just means you have to grow your retirement nest egg elsewhere.

Growing Your Wealth Together

Even among financially savvy couples, you may disagree over how much risk to take with your investments. If one or both of you are unsure of where to start, or disagree over how to invest, you should consider working with trusted financial professionals to kickstart your wealth accumulation journey.

For a more DIY approach, you can consider investing in robo-advisory platforms, and potentially even going at it on your own with stocks and bonds.

If you need more hand-holding, you can get in touch with financial consultants at Manulife (Singapore) Pte. Ltd. Depending on your financial needs, you can get a range of insurance solutions, including endowment plans, retirement plans or investment-linked plans.

Taking the Manulife InvestReady (III) as an example, you can utilise dollar-cost averaging (DCA) into a diversified range of funds, over multiple time horizons spanning 1 to 99 years. As you get ahead in your career, you can also decide to make periodic premium top-ups to your policy.

Depending on your preferences and lifestyle, there is also an option to invest in dividend paying funds, and either receive potential dividend payouts or reinvest it⁴.

For example, you can look at a scenario:

Source: all screenshots from Manulife InvestReady (III)

We can see in the chart below, how Tim’s portfolio will grow if he holds on to it until age 85 (i.e., for 50 years).

Even when he stops making premium contributions after policy year 10, Tim continues to receive potential annual dividends from the dividend paying funds. Based on positive funds performance, Tim can expect his portfolio value to continue rising to a healthy sum. As the portfolio value rises, the potential annual dividends also rise.

The values in the above illustration are rounded to the nearest dollar, and based on illustrated investment rate of return of 8% p.a. and 1.25% p.a. fund management charge. Based on an illustrated investment rate of return of 4% p.a., the values are: account value at age 48: S$107,639, account value at age 60: S$110,533, account value at age 75: S$112,891, account value at age 85: S$111,660. Total potential dividends based on 2% payout till age 85 is S$104,084. Total potential returns: S$215,744, 1.8x* of his total basic premiums paid. All values in the above illustration are non-guaranteed, and are subjected to the distributions and performance of the chosen InvestReady Fund(s).

*The figures are rounded to the nearest whole number.

If Tim decides not to take out the potential dividend payouts, but instead, reinvests it, his portfolio value can potentially spike over the same timeframe.

Regardless, this depicts the power of compound returns – if we continue to earn returns on our return over a long period of time.

 

The values in the above illustration are rounded to the nearest dollar, and based on illustrated investment rate of return of 8% p.a. and 1.25% p.a. fund management charge. Based on an illustrated investment rate of return of 4% p.a., the values are: account value at age 48: S$128,223, account value at age 60: S$168,372, account value at age 75: S$236,674, illustrated account value at age 85: S$296,987, 2.5x* of his total basic premiums paid. All values in the above illustration are non-guaranteed, and are subjected to the distributions and performance of the chosen InvestReady Fund(s).

*The figures are rounded to the nearest whole number.

Protecting Your Financial Future

Your biggest asset today is your health. It gives you the ability to go to work, and earn an income to provide for your loved ones and contribute to your shared financial goals with your spouse.

An unforeseen situation, such as death or terminal illness, will rob your family of not only their loved one, but also potentially their ability to maintain their current standard of living. Any savings or investments that you may have been building up for a shared retirement or your children’s education fund may have to be withdrawn in the near term to take care of their daily needs – leaving a gap for their longer-term expenses.

This is why protecting your wealth can be equally important to building it in the first place. You can consider buying adequate insurance coverage to ensure you are able to tide through unforeseen scenarios in life.

You can now boost your protection coverages by adding ReadyCare Rider to your Manulife InvestReady (III) policy. In Tim’s example, he had increased his protection coverage with ReadyCare Term Rider with an additional sum insured of S$400,000. This additional amount will be paid out to Tim’s loved ones in the event of death or terminal illness.

There are 4 ReadyCare Riders available. They are: 1) ReadyCare Term Rider; 2) ReadyCare Term and Hospitalisation Rider; 3) ReadyCare Term and all Stages CI Rider; and 4) ReadyCare All-in-One Rider. These ReadyCare Riders aim to provide policyholders with a holistic solution that addresses their long-term financial goals while safeguarding them against unexpected circumstances. Protection coverages for CI benefits include coverages for all stages of critical illness, while hospitalisation benefits include daily hospital income, daily Intensive Care Unit (ICU) income, recovery and surgical benefits.

By working together to build and protect your wealth as a couple, you can create a strong financial foundation that supports your share goals and life aspirations. To learn more about investing and protecting your wealth as a couple, you can preview the Manulife InvestReady (III) and ReadyCare Rider or get in touch with a financial consultant.

Read Also: Young Working Adults: What You Need To Know To Plan For Your Retirement

 

Footnotes

Terms and Conditions apply. Please refer to the respective product summary for more information.

¹ A one-time Annual Premium Bonus will be given for selected MIP options if the first basic premium is paid via annual premium payment mode. If there is any change in mode of premium payment from annual to non-annual during the premium shortfall charge period, the Annual Premium Bonus will be deducted from the account value.

² Loyalty Bonuses vary in accordance with the MIP selected.

­⁴ Subject to the distribution rate and frequency of the chosen InvestReady Funds. The issuance of dividends remains at the discretion of the relevant fund manager and is not guaranteed.

⁵ Coverage against death and terminal illness up to policy anniversary immediately after the 99th birthday of the life insured.

⁹ Partial withdrawal charge applies if you request for partial withdrawal during MIP. This charge does not apply to withdrawal of any accumulated dividends.

¹⁰ The annual basic premiums for S$12,864 and S$864 are based on illustrated investment rate of return (IIRR) of 8% p.a.. Based on IIRR of 4% p.a., the annual basic premiums are S$12,956 and S$956. The cost of insurance (COI) for ReadyCare rider is deducted monthly via units from the account value of Manulife InvestReady (III) throughout the rider’s policy term. The ReadyCare rider will lapse if there is insufficient account value from Manulife InvestReady (III) to deduct the monthly COI.

Important Notes

Manulife InvestReady (III) and its supplementary benefit are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy’s surrender value (if any) may be zero or less than the total premiums paid. Your investments are subject to investment risks, and you may lose the principal amount invested. The performance of the InvestReady Fund(s) is not guaranteed. The unit prices and any income accruing to it may fall as well as rise. The Fund Managers shall have the absolute discretion to determine whether a distribution is to be made in respect of the InvestReady Fund(s) as well as the rate and frequency of distributions to be made. The intention of the Fund Managers to make the distribution and the distribution yield for the InvestReady Fund(s) is not guaranteed, and the Fund Managers may review the distribution policy depending on prevailing market conditions. Distributions may be made out of income, net capital gains and/or capital. Past distribution yields and payments are not necessarily indicative of future distribution yields and payments. Any payment of distributions by the InvestReady Fund(s) may result in an immediate decrease in the net asset value per unit. You should read the prospectus and the product highlights sheet and seek financial advice before deciding whether to purchase units in the InvestReady Fund(s). A copy of the prospectus and the product highlights sheet can be obtained from a Manulife Financial Consultant or our Appointed Distributors.

This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC websites (www.lia.org.sg or www.sdic.org.sg)

We recommend that you seek advice from a Manulife Financial Consultant or our Appointed Distributors before making a commitment to purchase a policy.

Information is correct as at 27 09 2023.

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