The start of your marriage journey is worth celebrating and reveling in! Preparing for large financial events including your wedding, honeymoon, and housing could inevitably lead to needful conversations between you and your partner.
Preparing to meld your finances and dreams together is a great experience in establishing a marriage built around mutual trust, respect, and honesty.
Not sure where to start? Here’s our financial planning checklist to put you on the right track.
Discuss spending habits & financial commitments
Key talking points/questions
- “What is your relationship with money/how was money viewed growing up?”
- “How much do you want to save each year?”
- “How much are you comfortable spending each month?”
- “What big goals do you have financially?”
Sitting down and having an open conversation about spending and saving money will make conversations about these habits easier in the future. Everybody views money differently depending on their upbringing and how their parents viewed money.
Consider which of you is a saver and a spender and find middle ground on money habits. While some money decisions seem better than others, spending money varies from person to person. Understanding the way your partner spends money will allow you a new perspective while determining what is considered important vs unimportant purchases.
Work on a budget
Easy step-by-step to make a budget
- Compile your net income (this is take-home income after deducting your CPF contributions)
- Determine monthly mandatory expenses (rent, groceries, etc)
- Define how much to set aside into savings (on average, 20% of your income should go to savings)
- Make a flexible account (otherwise known as “wants” vs “needs”)
- Research budgeting apps to keep track of your money (some of our favorites include Planner Bee, Wally, and Spendio)
- Putting together a budget will allow you both to track expenses, savings, and see where/when your money is going out each month. It’ll also make it easier to keep track of finances for tax purposes.
A couple other pointers:
- Try your best to not spend any more than 50% of your income on necessities.
- A maximum of 20% is for hobbies, entertainment, eating out, etc. Budgeting this 20% may seem trivial, but it’ll save you from spending too much on coffee in a month!
Decide how to share money responsibilities
Pros to a joint account
- Encourages trust and transparency with your partner
- Makes it easier to plan and pay for expenses without splitting bills
- Offers a clear picture of finances all in one place
Pros to a separate account
- Some couples have different financial goals between them
- Separate accounts boost autonomy
- You can easily see what you’re bringing in every month without having to sift through your partner’s income
- Some couples choose a hybrid of joint and separate accounts by keeping monthly spending/bills in a joint account while each partner has their own separate savings account dedicated to specific and personal financial goals.
Different personalities prefer working on different portions of the budget – an example of this is one partner focusing on the groceries and home expenses while the other focuses on loan repayments and insurance.
If you’re unsure of the best methods for paying off student loans, Alevin Chan from SingSaver provides great insight.
Set goals and work on them together
Financial goals are best when they’re S.M.A.R.T *
Specific: general goals are great, but it’s easier to be motivated when you have clear and specific goals in mind.
Measurable: decide on the goal and then give it a specific deadline.
Achievable: make sure of the probability of your goals becoming reality. Adjust when necessary.
Realistic: assess if your goals are in-line with other goals you and your partner have made.
Time-bound: set multiple “due dates” to accomplish your financial goals. These can be daily goals, weekly, and even annually.
Deciding on SMART goals takes specific planning on short and long-term financial goals while evaluating what you can afford. From there, both you and your partner can determine what it’ll take to make your dreams a reality.
Some examples of SMART goals include paying off credit card debt, saving for retirement, and paying off student loans.
Build an emergency fund
Easy measured steps to prepare your emergency fund:
- Make it easily accessible by both you and your partner
- Contribute to it every month
- Put it in a place where it can incur interest
- Setting aside money in its own unique fund is purely for unexpected events such as loss of a job, medical emergency, or any other sudden events. How much money you have in this account depends on how financially stable you and your partner are. On average, an emergency fund should have approximately three months of your monthly combined salary.
Review your fund every few months to make sure it’s building!
Summary
As your marriage changes with time, so do your goals and desires. At the end of the day, keep communicating about what you want, need, or would like to do differently with your finances. Don’t be afraid to come back to your budget and long term goals!
For more financial planning ideas and tools, bookmark our website.
* Information provided by MoneySense