Managing money as a couple can be tricky, but it is very important that you and your partner are on the same boat when it comes to finances.
1 + 1 can become >2 if you plan your finances wisely as a couple.
These are the top 6 tips to take note of to maximize your wealth together as a couple.
This article was written by a Financial Horse Contributor.
1. Be honest, be candid
The number one thing for healthy finances as a couple is open & honest communication.
You can’t build a future together, if you aren’t starting from a place of truth.
The more candid you are able to be with each other, about your current state of finances and where you want to be in the future, the better you can cultivate your action plan.
The more you talk to your partner about money, the more comfortable you are.
If you can share openly about your finances, this fills up your trust bank, and you can tackle problems together effectively.
You will also be able to set more realistic goals, as well as actionable steps to achieve them.
2. Joint goals, and set priorities
If you are keen to grow your finances as a couple, you would need to set goals and priorities.
If you are not on the same page with your priorities, you would eventually sabotage each other and create conflict.
Thus, it is imperative to discuss openly your goals and priorities.
3. Check in with each other (and learn from each other)
It would be very difficult to set a goal, and hope it follows through without further communication.
Having a partner means you can rely on each other as accountability partners.
Checking on each other also means communicating about where you’re at, how’s it going, and perhaps if changes need to be made.
It is very normal for financial goals, and plans, to change.
It is very useful to have another person to brainstorm with when you are met with challenges.
Investing is an area where knowledge compounds.
If you can help each other out in investing and growing your money, it will supercharge your financial acumen as a unit.
Each person tends to have their area of competence, which you can definitely draw on, as well as help each other where you have weaknesses.
The couple that learns together, grows together.
4. Plan for emergencies (and other what-ifs)
Besides planning for the upside, you also need to take into account the downside.
Building emergency funds together is an important task to prioritize.
Be real about the possible use-cases for this money, and any foreseeable emergencies.
Another area to think about is getting on the same page if other people come to you for money.
If a close friend or a family member approaches you for a loan, how should you respond. Agreeing to some ground rules together will help you build your finances together and establish trust.
BTW – we share commentary on Singapore Investments every week, so do join our Telegram Channel (or Telegram Group), Facebook and Instagram to stay up to date!
I also share great tips on Twitter.
Don’t forget to sign up for our free weekly newsletter too!
5. Update your wills and beneficiaries
If you are planning your finances as a couple, it may also be a good time to update your wills, and beneficiaries.
This includes CPF, and insurance plans.
Who are my beneficiaries?
6. Optimize for retirement
As a couple, one of the key long-term goals is securing a stable retirement.
CPF is a cornerstone for Singaporeans and it is vital to understand use your CPF well.
CPF Retirement Sums
To begin, we can understand CPF retirement sums.
What happens to your CPF savings at age 55?
Firstly, a Retirement Account (RA) is opened for you. The main purpose of this account is to provide monthly payouts in retirement. You can start your payouts anytime from your payout eligibility age of 65.
When you turn 55, your CPF savings will be transferred, up to the Full Retirement Sum (FRS), to create your RA. Your Special Account (SA) savings will be transferred first, followed by your Ordinary Account (OA) savings.
If you do not have enough in your OA or SA to reach the FRS but have used your CPF savings to buy a property with remaining lease that can last you until age 95, your CPF savings withdrawn for your property (including accrued interest) will be used to meet your FRS.
The maximum amount you can use for this is equal to your BRS. Your monthly payouts will not increase by using your property as a pledge. When you sell your property, you will have to restore your RA up to your FRS with the sales proceed.
What is CPF Life?
With CPF LIFE, you can have a peace of mind that you will always receive a retirement income no matter what age you live to.
When you start payouts, anytime from age 65, your RA savings will be used for CPF LIFE. The more RA savings you set aside, the higher your payouts.
Try out the Monthly Payout Estimator to find out how much RA savings you need for your desired monthly payouts.
Check out CPF Planner to create a personalised plan to achieve your retirement income goals.
You can also boost your future retirement payout by making a cash top up to your Special Account.