Financial planning for married couples

As romantic as weddings and honeymoons are, making a lifelong commitment to your partner also requires honest conversations about finances and other practical matters.

By having these discussions even before walking down the aisle, couples can make sure they are on the same page when it comes to how they spend, save, and invest their money — regardless of whether they choose to pool all their money, keep their finances separate, or do a combination of both.

This is especially important because there are big-ticket expenses and life events that every couple will have to navigate as a pair over the course of their lifetimes, including getting married, buying their first home, and starting a family.

Working to identify and align your financial path forward is key to living your dream life together. You also set a strong foundation for your marriage by planning your finances early as a couple and maintaining regular, open communication throughout the relationship.

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Here are some ways couples can approach investing.

As a couple, understand your spending patterns

To start, have a frank, non-judgmental discussion about each other’s money beliefs, spending habits, any existing financial commitments, and financial history. These will tie into your financial goals and lifestyle expectations later. 

Deciding how much to spend on your wedding and how to fund it will likely be the first major financial planning exercise for the both of you. Expect this to test your communication and goal-setting skills as a team. If you wait till after the wedding to talk about how to share the costs, it may lead to misaligned expectations and conflict.

Another crucial question is how to organise your bank accounts. One option is to keep separate accounts for each person — this can prevent spender-versus-saver personality conflicts, but may also be a lot of work when keeping track of budgets and expenditure.

Alternatively, you may want to create joint accounts so that it is easier to keep track of the money, although a downside is that it could potentially lead to one person feeling resentment over the other’s spending habits.

The other option is to use joint accounts for shared expenses and goals, such as household utility bills and retirement investments, while maintaining separate accounts that allow for autonomy in personal expenses and any individual investments.

Before marriage, set common financial goals and plans

Next, you should list out your shared and individual life goals that will have a major financial impact. These will determine the amount of money you and your spouse should invest or save, as well as inform your investment strategies, time horizons, and risk appetites.

Joint goals as a couple may include buying your dream home, the number of children you want, the type of lifestyle you want today and subsequently in retirement, or even the FIRE (Financial Independence, Retire Early) movement.

A good habit is to put aside a percentage of your monthly income for your goals. If you have a joint account for investments or savings, you can consider setting up automatic transfers to it from your salary or personal bank account, for example.

Also, start building your emergency reserves, with enough money to cover a few months of expenses, in case of financial shocks such as a job loss or a sudden huge expense.

Discuss with your life partner how you can best match your investments to your shared goals, then chart out an investment plan and establish an investment budget that both of you are comfortable with. Investing your money, and letting compound interest work its magic over time, is a simple and powerful way to grow your household wealth. 

For short-term goals that are two to three years away, investors may prefer relatively stable or low-risk investments such as bonds and money market funds. For long-term goals such as retirement, you might consider passive investing, as well as having a mix of stocks, bonds, and other types of assets to form a well-diversified portfolio.

Insurance is another important part of couples’ financial planning. For example, there are mortgage insurance plans that provide life coverage for two joint homeowners, to protect you and your family from losing your home due to outstanding mortgages in the event of death or terminal illness. Medical and personal accident insurance plans are also available to cover dependents including spouses and children.

As lifelong partners, avoid excessive spending and debt

Remember to always live within your means. Overspending and taking on more debt than you can manage can lead to strife in your marriage. 

Keep your finances organised and review them regularly to make sure things are on the right track. Both spouses should know the latest complete picture of the household finances. Communication ought to be a priority — aim for a formal money conversation at least once a year, which you could schedule in advance, about near-term or longer-term decisions such as the household budget, your next vacation, or retirement strategies.

Always come up with a plan together on how to manage your joint investments and expenses, especially for large sums, so that there will not be a situation where one of you makes a major financial commitment without discussing it first.

Planning to start a family? Learn more about financial planning as new parents. Also find out how you can build passive income together as a couple.

To get started with Endowus, click here.

Next on the Endowus Fin.Lit Academy

Read the next article in the curriculum: How women can invest well: Breaking the bias on female investors

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This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Endow.us Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

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Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.