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Financial Intimacy: How To Mix Love With Money

Relationships and investing are both complicated and mixing the two can either be a home run or a recipe for disaster. As Michelle Singletary, author of Your Money and Your Man: How You and Prince Charming Can Spend Well and Live Rich, once said:

“Couples want to know should they have his, hers, or ours, or all of the above. They’re not sure how to manage it. And that’s where a lot of the arguments come in, especially if there is uneven income earning between the two.”

Sometimes an individual may feel like a child receiving an allowance from his or her spouse, but it turns out that the person simply cannot handle money well. The situation can be resolved if both parties begin to be accountable for their money. Aside from this, here are some tips to boost your financial intimacy:

1. INTERVIEW EACH OTHER

Upon entering a serious relationship, you must discuss about your perspectives on money, spending habits, and sharing costs. This will make talks about financial issues easier as time goes by – especially if you are planning to spend the rest of your lives together.

For couples who are about to get married, you must touch on the long-term subjects such as how to enhance your credit scores, how to address retirement, how lavish your wedding ceremony will be, and how do you plan to manage your money.

2. BE COMPLETELY HONEST

Regardless of whether you have joint or separate bank accounts, you must always be honest to your partner about your current financial situation and your ideal financial situation. Tell him or her about your purchases, debts, income, assets and other things that are in your account/s right now. As for your ideal financial situation, relay your future plans such as having annual overseas trips.

Financial intimacy entails full disclosure about your finances including knowing what documents are signed and where the records are kept.

3. SEEK OUTSIDE HELP

When it comes to marriage, you become half of a legal and financial partnership once you say “I do!” This is why Premarital Counseling incorporating a strong financial component is a great help. If you are deciding to purchase a condo or an HDB through your CPF accounts, the financial professional will guide you to good credit score and substantial amount of savings. An accountant during the first year of marriage is also helpful as your taxes can get complicated during the transition from single to married.

Image Credits: pixabay.com (CC0 Public Domain)

Sources: 1,2, & 3

Sensible Steps To Prepare For Your Child’s Tertiary Education

1. ESTIMATE YOUR TOTAL COSTS

The education system in Singapore follows high standards of quality and fosters excellence in its students. Offering various choices for pre-school, primary, secondary and tertiary education, it is worth taking a careful consideration at Singapore’s local schools. Not only do they provide a more affordable rate but they also set the bar for all the universities across the nation.

Estimate how much you have to pay for the school fees, living expenses, and other miscellaneous. Do not forget to factor in the inflation rate. For example: If the school fee at NTU or NUS is about S$27,560 last 2010, it will increase to up to S$38,000 by 2030 due to the annual inflation rate of 1.6%. How do you plan to save up for that?

2. LOWER THE COSTS

If the total spending capacity of your household is tight, consider reducing your child’s university expenses. Take up scholarships and other financial aids available at the school. Also, it is important for your child to figure out what he or she really desires to become before venturing off to a course and later shifting to another. An education fund for four years is definitely cheaper than a fund for six.

3. CHOOSE THE FINANCIAL PACKAGE WISELY

There are tons of financial packages tailored to help you save for your child’s tertiary education. Before deciding to commit to one, you must…(a) set your goals first, (b) assess if the package meets your needs, (c) determine how much you can afford, (d) and know how much risk you are willing to take.

After clearing those things up, you must choose between:

a. LIFE INSURANCE PLANS

If you are going to rely on whole life policies, note that only a part of the policy value is guaranteed. The rest of the non-guaranteed value relies on the performance of the insurer’s participating fund. While investment-linked policies do not guarantee the fund values. Said values rely on the investment performance of underlying funds.

b. UNIT TRUSTS AND EXCHANGE TRADED FUNDS (ETF)

The underlying assets that your unit trust or ETF is invested in determines the value of your investment. Given that your investment path is fixed until your child enters tertiary education, you must select a unit trust or ETF that accommodates your timeline and investment objective.

c. BONDS

Bonds, usually regarded as less risky than equities, are primarily fixed income-securities. You shall receive the bond face amount on maturity. However, it comes with the credit default risk of the issuer. A decreasing credit quality of the issuer may cause its bond’s price to decline.

Image Credits: pixabay.com (CC0 Public Domain)

d. TUITION FEE LOAN SCHEME

Aside from the options above, you can consider loans such as the Tuition Fee Loan Scheme for approved schools. The loan has 0% interest during the period of study.

e. CPF EDUCATION SCHEME

The CPF Education Scheme allows you to borrow from your CPF ordinary account to sustain your child’s local tertiary education costs at approved schools. It is subjected to a withdrawal cap. After graduating, your child will be required to repay the amount withdrawn plus additional interest.

Sources: 1, 2, & 3

Important Money Matters To Sort Out After Divorce

Ending your relationship with someone you vowed to spend a lifetime with is never easy. Getting a divorce causes a significant life change that is often complex and stressful. It involves coping with several issues such as division of assets, discussion of maintenance, and custody of the children. These issues bring forth emotional, economic, and legal considerations.

Divorce is not simplistic wherein one solution fits everyone else’s circumstance. It is case-specific as it takes the needs and means of each person into account. Even the length of your marriage affects the division of assets. For instance, if your marriage is brief, the court may decide to part you with the money you had before coming in to the relationship.

According to the 2013 Population Trends by Statistics Singapore, marital dissolutions are escalating with 7,386 in 2009 from 7,216 in 2008. With this increasing number of divorced couples, it is important to discuss the financial matters to sort out after the breakup.

1. IMMEDIATE FINANCIAL CONCERN

Your first concern shall be the recurrent household bills. If you had been paying your bills through a joint account, you have to make some arrangements with your bank to dissolve this account and pay through your personal account instead. Remember to update your GIRO arrangements as well.

2. MAINTENANCE AFTER DIVORCE

Maintenance is intended to cover the living expenses and necessities of the wife and her children. Under Singapore’s law, maintenance for the wife continues until she remarried or passes away while the maintenance for the children continues until the age of 21 or until graduation. The husband can pay the wife in a lump sum but only monthly maintenance is allowed for the children.

There is no specific amount or length of maintenance as the Family Justice Courts examine the situation to arrive at a reasonable and fair decision.

3. THE FAMILY HOME

One of the most daunting decisions you have to make (especially if you used your CPF savings to buy a property with your ex-spouse) is the housing arrangement. Are you going to sell your family home? Or will you keep it while the other one moves out?

If you intend to sell your house wherein CPF savings were used to purchase it, you will need to apply for CPF refunds to your respective accounts. Please visit the CPF Board website for more information.

Image Credits: pixabay.com (CC0 Public Domain)

Sources: 1, 2, & 3

Singaporeans, Must You Discuss Your Salary To Your Spouse?

If you were tasked to participate in a television game show to test your knowledge about your spouse, how well do you think you will do? Getting your spouse’s full name correctly is easy. But will you still get it correctly if you were asked about your spouse’s exact income?

According to a 2015 survey by Fidelity Mutual, 43% of the participants had no clue about each other’s earnings. The percentage of couples who were ignorant about their incomes have grown compared to the survey 3 years ago. Furthermore, 1 in 10 people was off by US$25,000 (S$33,700). This is no laughing matter.

You cannot blame these numbers on poor communication alone as the ever-changing economy may also be the malefactor. A shift in the workplace is seen as many employees become freelancers while others work on multiple jobs with unpredictable hours (much like Uber drivers). If your spouse belongs to the cluster of people whose income is relatively unpredictable, you still have to be informed.

Asking anyone how much they make is a taboo subject especially in our Asian culture but if you are planning to spend the rest of your lives with the person, you have the right to know. Your annual household income dictates how you are able to save and your quality of life in general. Knowing each others’ assets and liabilities can help plan your future well (including your plan for retirement).

To put that in perspective, you have to realize that our lives are filled with uncertainties. Emergency expenses, hospitalization fees due to chronic illness, loss of a spouse and unemployment can affect your finances. You have to be prepared. This is why it is vital that married couples communicate and cooperate in managing their finances no matter how much they earn.

As you begin to open up about this subject, it can be uncomfortable for some and fight-inducing for others. Given the extent to which our society judges the person based on how much they earn, this particular subject is susceptible to dangers. Dangers that the other person can feel insecure, frustrated or inferior. But as Richard Vondra, the first Vice-President of Spire Investment Management, once said: “You don’t have to be rich, but you do need to make sure you’re able to support each other.”

Beyond your fear of being judged, knowing your spouse’s income is one of the most basic elements of your finances. Moreover, it may just be the key to your marital bliss! Studies have shown that the happiest couples talk about money and stay out of debt.

Image Credits: pixabay.com (CC0 Public Domain)

Ask yourself: “Will having this financial information change my life?” Then take action based on your answer.

Sources: 1, 2, 3, 4, 5, & 6

Important Money Matters In Marriage

As you may know, money is one of the biggest reasons why couples get divorce. Perhaps the reason why people fight most about finances is because of its measurable nature. With money, the give and take parts are quantifiable. Thus feelings of inequality and resentment can arise.

Discussing money matters may not seem romantic but it is very essential. Here’s where you shall start:

1. DETERMINE YOUR FINANCIAL GOALS AND RESPONSIBILITIES

Setting long-term and short-term financial goals such as establishing realistic budget should be done together. Along with the goals, you must assign financial responsibilities to each other. Who shall pay the utility bills? Who shall do the bookkeeping? Consider various factors such as time, knowledge and skills when deciding which of you shall take the primary responsibility for each task.

2. CONSIDER GETTING INSURED

The vow of “for better or worse, for richer or for poorer…” entails an important promise to live in a financially able home. Buying appropriate insurance coverage, to safeguard you from unforeseen financial hardships, can help embody this vow. Consider these types of insurance:

a. Life Insurance: This policy protects you and your dependents by giving the sum assured under certain circumstances such as being permanently disabled or critically ill. The agreed amount of money is intended to help you and your dependents meet your financial needs.

b. Health Insurance: This policy covers accidents, illnesses, and disabilities that affects your health. To help you and your family deal with the expenses, different health insurance policies are available in the market.

c. Home Insurance: This policy is designed to protect your home and its contents as well as covering any renovation work. Usually, homes that are less than 10 years old or those that are renovated within the last 10 years cost less to insure.

3. ESTABLISH A REALISTIC BUDGET

If you are planning to spend your lives together, it is only fitting that you learn to manage your finances as a unit. Once a month, evaluate your expenses and review important documents (e.g., credit card billing statement or utility bills) to help you create a realistic spending and budget plan for the weeks ahead. Make this a healthy habit to shield your family from piles of debt.

4. DISCUSS ABOUT THE NECESSITY OF A WILL

A Will is a legal document that communicates an individual’s final wishes. It determines not only the distribution of your properties but also the guardianship over your children in the event that both you and your spouse die.

Some people find it difficult to discuss about creating a will as the thought of it seems unpleasant, pessimistic, and morbid. However, think of it as an insurance tool that protects your assets and ensures its smooth transition. It is ideal to make a Will before having children or while they are still young.

Image Credits: pixabay.com (CC0 Public Domain)

Sources: 1, 2, 3, & 4

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