Setting financial resolutions at the beginning of a new year has always been a popular practice.
Many of us would want to improve our financial habits, such as controlling our spending, saving more, or investing consistently.
Setting financial resolutions for oneself can be straightforward. However, achieving these resolutions frequently depends not only on our individual efforts but also on the cooperation and involvement of our partners. This could be a spouse or someone that we intend to settle down with.
When couples set and pursue financial resolutions together, it does more than just pave the way for a more secure financial future together. This joint effort also develops greater trust, shared responsibility, and accountability for the relationship.
#1 Open A Joint Savings Account & Set Savings Targets
There’s a common misconception that only related individuals can open joint savings accounts, but this isn’t the case. In reality, any two individuals can open a joint savings account as long as they both agree to it.
Joint savings accounts can be particularly beneficial for couples including those who are unmarried. Unmarried couples can use a joint savings account to save for shared goals, such as the down payment on a future home or to pay for a wedding.
Similarly, married couples can utilise a joint savings account to set saving targets for themselves. These targets might include building an emergency fund or family aspirations like a year-end vacation or a new car.
Furthermore, a joint savings account fosters a sense of mutual accountability in the relationship. The arrangement encourages both parties to work together responsibly towards their combined savings objectives.
Read Also: 11 Joints Savings Account To Open With Your Spouse
#2 Maximise Credit Card Benefits By Spending Together
Pooling spending together on a single credit card, rather than using separate cards, can often be more beneficial. This is because many credit cards offer attractive cashback bonuses, but these may be contingent on meeting a minimum monthly spend. By combining expenses, the cashback that a couple can earn could be higher than what they could have earned individually.
For couples, it makes sense to consolidate expenses into a few cards. For instance, all our dining expenses could be charged to one card, while a different card could be used for groceries and a third card for retail and online purchases. This strategy allows couples to fully capitalize on their credit card benefits.
#3 Optimise CPF Savings Together
Central Provident Fund offers its members a base interest rate of 2.5% per annum for the Ordinary Account and 4.0% per annum for the Special, MediSave and Retirement Accounts. Additionally, there is an extra 1.0% per annum interest on the first $60,000 of a member’s combined CPF account balances.
This bonus interest can significantly enhance the savings growth over time.
In the context of a couple’s financial planning, this CPF interest structure has important implications. To maximise interest earnings, it’s beneficial for both partners in a relationship to have similar CPF account balances.
This is because the additional interest is capped at a certain amount of combined CPF balances ($60,000), so having a balanced amount in each partner’s account optimises the interest earned.
For example, if one partner has $80,000 in their CPF accounts while the other has only $40,000, they are not maximising the potential interest they could earn as a couple from CPF. In this scenario, the couple would benefit from topping up the account of the partner with the lower balance. By ensuring both individuals have closer to $60,000 in their CPF accounts, they can collectively earn more interest.
For couples, this strategy requires a level of financial cooperation and understanding. It involves not just managing individual finances but also coordinating their financial strategies together so that they can optimise their CPF accounts for retirement.
Read Also: Complete Guide To Your CPF Contributions In Singapore (2024): Salary Caps, Contribution Rates And Allocation Rates
#4 Plan The Family Budget Together
Planning a family budget together, rather than maintaining individual budgets, is vital for couples. When couples set a budget together, they can discuss and align on shared financial goals that they would have, whether it’s to build up emergency savings, upgrade a property or plan towards early retirement.
By working together on a budget, couples can ensure efficient allocation of their combined resources, prioritising essential expenses like bills and mortgage payments, and avoiding unnecessary financial strain.
Discussing and agreeing on a budget also improves communication about finances, a topic that can often be sensitive. This communication is crucial in preventing future misunderstandings and conflicts over money, which can cause unnecessary stress in a relationship.
#5 Review Your Insurance Policies Together
Most of us already know the importance of why we should review our insurance policy regularly as individuals. However, reviewing insurance policies as a couple, rather than individually, is also important.
When couples review their insurance policies together, they gain a holistic view of their combined coverage. This ensures that all aspects of their shared life are adequately protected. For instance, one partner might have a robust health insurance policy while the other’s policy might offer better coverage in areas like disability or critical illness. Reviewing these details together allows the couple to identify any gaps in coverage and make informed decisions to fill them.
Moreover, life changes such as marriage, the birth of a child, or buying a house necessitate adjustments in insurance coverage. Reviewing policies together means that couples can update their coverage accordingly to reflect these life events, ensuring that their overall insurance coverage remains relevant and adequate when their family expands.
Lastly, reviewing insurance policies together as a couple supports better estate planning. It ensures that both partners are aware of the beneficiaries in each other’s policies and that these details are in line with their broader estate planning goals, like providing for children or securing the financial stability of the surviving partner.
Read Also: Why Married Dual-Income Couples Should Try Living As A Single-Income Family
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