updated 26 Sep 2010, 05:44
    Powered by
user id password
Sun, Sep 26, 2010
The Sunday Times
EmailPrintDecrease text sizeIncrease text size
Money and marriage: It takes two to tango
by Gabriel Chen

Talking about financial matters may not be particularly romantic – especially during the excitement of planning for the dream wedding.

Given the amount of work my bride and I had to do to ensure that everything ran smoothly on our special day, thrashing out our financial goals could well have been the last thing on our minds.

However, ignoring this important discussion – or postponing it altogether until the wedding celebrations were over – would not have been wise.

The reality is that money issues can be one of the main causes leading to arguments between spouses, and you certainly want to be on the right financial footing together as early as possible.

Financial advisers caution that marriages can fall apart because of financial stress. As they say, to make marriage and money work, it takes two to tango.

Before Wei Jiat and I tied the knot last November, we sat down and discussed the kind of lifestyle we hoped to have, whether we wanted to have children and if so when, and at what age we planned to retire. We were upfront about what we would each bring to our blissful union, in terms of contributions and obligations.

We identified our goals – common as well as individual. We did not dwell too much on housing as we had already made a downpayment on our flat and needed to pay the balance only several years later.

We talked about our earning expectations for the future and shared with each other whether we had substantial loans or monetary commitments to our respective families.

Before you embark on this earnest conversation with your loved one, first spend some time understanding your financial DNA.

And if you have not already done so, you may want to ask yourself these questions: Are you a saver or spender? If you are a saver, are you willing to sacrifice by contributing more?

Thankfully for me, I am a saver and so is Wei Jiat – despite her need to splurge on the occasional designer bag.

However, some couples may be polar opposites and this may require negotiation and compromise about how to save and what to spend on.

Some of the other questions you want to think about are:

  • Do you know what insurance policies or investments you have?
  • Do you have the ability to manage money well?
  • Do you have absolute trust in the other person? (I hope for your sake you know the answer to this one.)

One issue that we discussed – and on which we came to a common understanding – was that we would open a joint account.

In theory, there are disadvantages to setting one up. A couple may find that they are giving up ownership and control, while there is also the potential for inequitable spending by one spouse.

We considered the pros, which easily outweighed the cons, of having a joint account. Ours would be for household expenses and any shared expenses.

We would keep individual savings and investment accounts separate because we felt having these would help preserve our personal space. There was no intent on our part to completely merge our finances as a couple.

Some spouses, for example, hold supplementary credit cards in order to be transparent about their spending habits. We found that too stifling. One of the first things we did after our honeymoon was to update our Central Provident Fund (CPF) nominations.

This would allow us to specify who would receive our CPF savings, and how much each nominee should receive, when we are no longer around. This was an important consideration because, upon marriage, our previous CPF nominations would be revoked.

Both of us want to have a say as to how our assets will be distributed should the worst happen. If we had not submitted a new nomination, our CPF savings would be distributed by the Public Trustee according to the intestacy laws.

While we have since sorted out many more financial issues together, there remain some yet-to-do items on our mental checklist. We hope to look at insurance for our home mortgage in the future.

There is a plan known as a mortgage- reducing term assurance, by which the surviving spouse can be “protected”, and in being so, can have peace of mind. In the event of a partner’s untimely death, this policy will cover a portion or all of the remaining housing loan.

Many couples dislike dealing with insurance – an unpleasant subject matter because no one likes talking about death.

Still, this is a necessary conversation that all couples must have. In fact, I believe an open discussion about one’s finances and a healthy respect for each other’s opinions from the start removes the financial roadblocks to a successful marriage.

[email protected]

This article was first published in The Sunday Times.

readers' comments

Copyright © 2010 Singapore Press Holdings Ltd. Co. Regn. No. 198402868E. All rights reserved.