Finances in a Marriage: Split Money Fairly Tying the knot with your partner is exciting. Merging two lives into one household and one vision for the future can also be incredibly challenging when it comes to money. Just because marriage evokes visions of shared responsibility doesn’t mean that your financial merge will bring automatic 50-50 responsibilities. Consider some likely scenarios that complicate the thought of a 50-50 financial split. You may be a spendthrift while he is a saver. You may make more money than he does. You may still owe on an education loan. Perhaps he is juggling credit card payments. Everyone has their own individual financial background, and it is rare that one partner’s situation replicates the other! By maintaining open, honest and respectful communication between the two of you, you can create a viable plan to reach your shared financial objectives. Here are 5 points to consider when working out the money-split in your relationship.
- Discuss your budget.
Start assembling a budget by writing down all of your shared expenses. These include mortgage, electric bills, gas bills, water bills, home improvements, insurance, and groceries. Then tackle other debts you may have incurred before you married each other. Are you still paying off your education loan? Is he making payments on a car loan for the vehicle he bought before he even met you? If your partner has a bigger loan liability, you may want to offer to help him out with the payments so you can liberate yourselves sooner from that debt. Alternatively, offer to take responsibility for a larger percentage of the shared expenses. If your partner refuses to let you help with his debts, you can ease the burden in other ways like paying for lunches out or small vacations. If you have a larger debt than he does, don’t be shy about discussing how he might help you pay it off. In addition to shared expenses and debts, take the time to discuss your short-term and long-term goals together. Short-term goals for example, may include a simple beach vacation, while a long-term goal might be buying a second house. Taking the time to discuss your budget can help you track your incomes and expenses. Ultimately, it can help you learn how to improve your common financial standing.
- Maintain individual accounts, but contribute to a joint one.
Having individual bank accounts can give both of you a sense of financial independence. However, it is also important to have one joint account from which you can draw funds to pay for shared expenses. Setting up a direct deposit from each individual account to your joint account will make it easier to contribute regularly. A joint account demands mutual trust. It also encourages a shared commitment toward a common financial goal.
- Work on a savings strategy.
You will save and grow your money faster if both you and your partner apply yourselves to the same savings strategy. Commit to a certain savings level that both of you are comfortable with, and make regular deposits of an agreed amount into a joint savings account. For example, you can both agree to save 20 percent of your salaries every month. Agreeing to a percentage rather than a fixed amount means that one of you may be contributing more to your savings account, but both of you will be taking the same financial hit. Using a percentage level will make it easier to adjust your savings amount should your salaries change.
In the same way that your salaries may differ from each other, so may your investment behaviours. You may want to aggressively invest a high percentage of your savings, while your husband wants to conservatively place the household’s money in a low-risk but low-interest-bearing account. To manage your money equitably, try to find a middle ground that both of you will be happy with. If you are having a hard time reaching an acceptable compromise, you can seek outside help from a financial advisor. There are many financial advisors in Singapore whom you can consult. Make sure that your investment strategy is based on shared financial goals. You may be planning on early retirement at the age of 55 while your husband is planning to work well past his 60th birthday. Discuss these issues to ensure that your individual efforts are not counterproductive. Once you have decided on an investment plan, be aware of where your investments are placed, and how well they are doing. Adjust your strategy accordingly as you go along.
- Have regular talks about money.
Conduct regular discussions about your finances. Depending on your preference and schedule, these money talks can be held weekly, bimonthly or monthly. Both of you should be aware of your current financial standing. This includes how much money there is, where it is kept, what your expenses are, and what they are for.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).