5 Ways To Recover Financially After A Divorce

How to recover financially after a divorce

We previously wrote about what you need to do when you get married. However, life does not always go your way and you might find yourself needing to divorce. Divorce is an emotionally and mentally draining process that involves many parties. More importantly, what happens after is a big financial change in your life. In this article, fundMyLife shares tips on how you recover financially after a divorce.

#1 Step up

If you were the one handling the household expenditure and finances, you should have less trouble managing your finances post-divorce. However, if you’ve always let your now ex-partner handle things, you’ll have to step up to take charge of your own finances again.

The difficulty depends on how dependent you were on the other partner for keeping track of finances. Fret not, there are plenty of tools out there. It ranges from simple things like an Excel spreadsheet, to finance tracking apps like Seedly. You’ll also need to read up on personal finance from media sites like DollarsAndSense, SG Budget Babe, and even our own blog posts.

#2 Review your expenditure

As mentioned, make sure you keep track of your expenses so that you know where and what you’re spending on. If you track your expenses, you can make better plans for where your money go. Then again, this is a generally good habit to have when it comes to personal finances for everyone.

#3 Set up a budget

Since there is the possible transition from a double-income household to single-household one, you will have to redo your budget to reflect this change. You’ll have to cut back on luxuries and set a realistic budget.

Also, expect your expenses to increase slightly. In the past, you might have purchased groceries in bulk for family use. Now, you purchase things only for yourself. However, some expenses don’t end after a divorce. If you have a child, you still need to pay child support. Similarly, if you two shared a pet and you decided to take custody of the pet, you’d be responsible for keeping it and its upkeep.

#4 (Re)gain financial independence

If both of you and your ex-partner were working before the divorce, you’re less vulnerable since you’re financially independent. However, if you quit the workforce to be the homemaker, going back to the workforce may be tough. This is more so if you haven’t been working for a while.

To address this, reskilling is an option to equip yourself with employable skills. For example, you can use your SkillsFuture to learn a new trade. If you still have trouble finding a job, you can book an appointment with an employability coach from the Employment and Employability Institute (e2i) for career guidance and coaching. It is hard to recover financially after a divorce if you cannot feed yourself – make sure you’re as independent as possible.

#5 Speak to your financial adviser

Just as how marriage counts as a life event that requires a financial portfolio review with your financial adviser, a divorce is also a life event that demands a similar treatment. As such, it is important to speak to your financial adviser to readjust your portfolio to take your new and old expenditures into account.

For example, in the past if your beneficiary of your life insurance was your ex-partner, you would need to change the beneficiary to someone else. Another example is that you no longer need to service your mortgage insurance after selling your HDB.  And you might have to strike out your ex-partner from your will.

Ask fundMyLife financial questions today!

We hope this article is useful to you if you’re going through a divorce, or if you’re considering it. It’s a huge change to your finances after splitting with your partner, but it is definitely possible to recover financially after a divorce.

If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

There is life after a divorce. You got this.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

The Best Insurance Policies At Your New Life Stages

The right policies when transitioning to new life stages

Life is a long journey. Typically, advancing into new life stages can be scary since each new life stage comes with its own special challenges and intricacies. Which you may or not be prepared for.

However, fear not. In this article, fundMyLife explores the insurance policies you need to get as you enter different new life stages. Typically, an individual in Singapore first goes through student life, followed by working adult life as unmarried, followed by marriage and family, and finally retirement. Do bear in mind that this guide accounts for more common life stages.

#1 Student

As a student, the minimum protection you should get is hospitalization plans for yourself. This is because you have do not have dependents, and you still relatively low risk for critical illnesses,  For students in tertiary institutions, your school usually has a group insurance plan.

The only downside to that is that those are group insurances, and the payout may not be adequate. A quick look at the group hospitalization NUS scheme for students reveals that the limit is B2 ward. As a student, you can also consider personal accident plans if you are active in sports.

#2 Working adult

Congratulations, you’re gainfully employed in a company! Often, being employed comes with corporate benefits such as group insurance. Similar to what we mentioned earlier for pre-graduation students, group insurances do not have high payouts and you typically need other plans to cope with new challenges. For example, on top of your hospitalization plan, you’ll need to get critical illness. Now that you’re older, you’re at higher risk of contracting critical illnesses, especially cancer (touch wood). The lump sum from critical illness plans will help you get back on your feet in those events.

Depending on the nature of your occupation, it’s a good idea to thinking about disability income as well. Of course, office work has relatively lower risk of disability-causing injuries, compared to a physically-demanding job like working in a warehouse.

What if you’re a freelancer? Almost 9% of Singapore’s workforce consists of freelancers. This number is set to increase over the years as the gig economy expands in Singapore. While the freedom of time is a plus as a freelancer, it may also be slightly trickier. Being a freelancer has various challenges. Firstly, freelancers often have irregular and unpredictable cash flow. Secondly, when freelancers fall sick or get injured they do not earn money at all. Furthermore, there is no company insurance benefits that employees enjoy.

From our research, how some freelancers cope is purchasing personal accident insurance with income protection riders. However, this can be an expensive option. Earlier in 2018, GigaCover launched Freelancer Income Protection (FLIP) Insurance to provide freelancers who are unable to work with daily cash benefits.

#3 Married

With marriage, you now have dependents, i.e. people who depend on you. At the risk of sounding grim, with additional responsibilities, your life is now not just your own.

As such, you can consider more policies at this stage. On top of hospitalization, critical illness, and/or disability income plans, breadwinner(s) should strongly consider life insurance. In the case that the breadwinner(s) pass away suddenly, the life insurance payout can tide his/her family by. Mortgage insurance will also be important as well if you have a loan for your house, as in cases of unforeseen circumstances, mortgage insurance covers the remainder of your housing loan.

Mothers-to-be can think about maternity insurance for the peace of mind during your pregnancy. When your kid is older, consider getting a personal accident plan for him/her, since children are prone to injuries.

#4 Retirement

Now that you’re older, and the children have flown the nest, it’s time to scale back on some policies. Keep your personal accident insurance, as the elderly are accident prone. As always, make sure you have hospitalization plans for yourself to cover hospital and medical bills. On top of that, once you’ve retired, you’ll be less exposed to occupational hazards that causes disabilities. Your children are fine on their own – you can focus less on life insurance and focus more on life.

Ask fundMyLife financial questions today!

That’s all we have for you, folks! We hope this article was useful for your journey in life ahead. Whether you’re still going to be in one life stage, or is moving on to a new one, you’ll need to be aware of several constants. Hospitalization plans should be a lifelong mainstay, as there is a chance of you being in hospital at any point in your life. Furthermore, another constant is that in each life stage, you have new responsibilities. As such, your new policies should align with those new additions.

Getting your insurance done when you enter new life stages can be scary, but that’s what we’re here for. If you don’t know who to ask or where to find amazing financial advisers, we got you. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our pool of financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

The Essential CPF Guide For Young Adults

An adult's CPF guide

Written by Letitia Jinghui Lean, edited by Jackie Tan

If you’re like me, a soon-to-be graduate about to enter the workforce, it’s probably high time you started getting acquainted with CPF. You know, “that compulsory government scheme that siphons off part of your allowance each month”. It’s gotten a bad rep for locking away the average Singaporean’s money till age 55, but there is another side to this complicated savings scheme, and we’re here to break it down for you. For the average millennial seeking financial independence and security, here’s your blueprint to understanding the intimidating CPF system to better guide you to a comfortable retirement:

#1 CPF is multi-functional

It sounds like CPF is just one jumbo savings/pension fund, but well, that’s barely scratching the surface. As defined by the Central Provident Fund Board, CPF is a “social security savings plan that provides working Singaporeans with security and confidence in their retirement years”, and every month, 20% of your salary (as the employee) goes to this account, whilst another 17% is contributed by your employer. This applies for all Singaporeans, unless you are: (a) self-employed, (b) working overseas, or (c) have renounced your citizenship.

Most importantly, CPF comprises 3 subsidiary accountsOrdinary (OA), Special (SA) and Medisave (MA). Remember the 37% of your salary that goes into CPF every month? Till age 35, different amounts are allocated to each of these subsidiary accounts like clockwork – 23% for OA, 6% for SA, and 8% for MA. It’s a whole different ballgame above 35, but eh, we’re sure you can google the new percentages when you hit that age. For now, just remember these numbers, and that each of the 3 subsidiary accounts have different purposes: the OA is used for housing, investment, education and insurance, the SA is used for retirement and investment, and the MA is used for hospitalization and medical insurance expenses.

#2 A fourth account – the Retirement Account (RA) is created when you’re 55

At 55, the remaining balances in your OA and SA are combined and transferred to automatically form the RA, to provide for comfortable self-sufficiency and retirement in old age. Monies are transferred up to the Full Retirement Sum (which increases approximately 3% every year), up to the Basic Retirement Sum (half of the FRS) with a property pledge, or even beyond for the Enhanced Retirement Sum (1.5 times the FRS). If you have excess above the minimum required retirement sum in your RA, this is when you can withdraw it, at the ripe age of 55.

The next milestone is then 65 years old, under a nifty lil’ scheme known as CPF LIFE. For now, all you need to know is that CPF LIFE is what gives you the monthly payouts once you’re old (and preferably not too wrinkly) at 65, and it’s based off your RA. The general rule of thumb: the more you have in your RA, the higher your monthly payouts.

#3 There are different interest rates for OA, SA and MA

As mentioned previously, CPF is kinda like a compulsory savings account, which means that it automatically generates interest for you, which introduces an almighty term – compound interest (great for more moolah). Interest rates for OA is at 2.5% per year, whilst rates for SA and MA are at 4% per annum. This is way higher than what most banks tend to offer for savings account (about 1% or less), so rejoice my fellow young adults!

As a bonus, there’s an additional 1% interest for your first $60,000 in your CPF – a good deal because that means you get higher interest rates for your OA at 3.5% and your SA at 5%. One caveat: this additional interest is capped at $20,000 for OA, and $40,000 for SA. Wily millennials will know it’ll make more sense to transfer money from the OA to SA to milk that higher interest rate for the SA account, but word to the wise – this transfer process is irreversible, so do give it careful consideration based on your own personal goals and circumstance before you make the decision.

#4 You get tax relief for being pious

As a full-fledged working adult, you will have to pay taxes. It’s inevitable, unless you pull a Trump. You can however, reduce the amount of taxes you have to pay, by voluntarily topping up your own or your family members CPF SA account. For each year, you get up to $7,000 in tax relief when you perform cash top-ups to your own account, and an additional tax break of up to $7,000 when you do the same for your loved one’s SA account – that’s up to $14,000 in tax relief a year! It’s a win-win situation because you save yourself from having to pay excessive taxes, whilst building your retirement fund at the same time.

#5 You can specify who receives your CPF savings after you pass on

Our time on this earth is finite. In Singapore, when you die (touch wood), the monies in your CPF account will be distributed to your surviving family members according to intestacy laws. For those who want more control over how your CPF savings are distributed, consider making a CPF nomination to ensure that your loved ones are taken care of upon your death, and the money gets distributed according to your wishes.

#6 You can pay for a home using CPF

As any Singaporean will attest, buying a house/apartment/flat in Singapore is ridiculously expensive. Its common practice to use savings from the CPF OA account to buy a HDB flat (assuming you’ve gotten your BTO), or to use it for monthly loan repayment to pay off the mortgage under the public or private housing schemes.

For those keen on buying a house in the near future, here’s 2 things to consider:

  1. Remember that the process of money transfer from your OA to SA is irreversible, so if you’re dead set on getting a house, stick to your guns and keep the money in your OA until you’ve bought one. The caveat of course, is if you don’t intend to purchase a property, or if you can splash the cash and do not need your CPF to cover for the cost of the property.
  2. Remember that to withdraw CPF funds from your RA for retirement at 55, you will have to satisfy the Basic Retirement or Full Retirement Sum with sufficient property pledge. A property pledge is a promise you undertake to return the CPF funds used to pay for your housing, with interest, should you sell your property. TLDR; if you want to withdraw all the excess monies in your CPF savings when you hit 55, you will have to own a house. Otherwise, it’s a cap of $5,000 on the amount you can withdraw from your RA.

Still confused? Here’s a more comprehensive review from DollarsandSense about the whole CPF-HDB housing scheme. You’re welcome.

Adulting is tough, entering the workforce with its mountain of responsibilities even tougher. We’ve consolidated just 6 key aspects of CPF most relevant to young adults, that we hope will help you navigate the complexities of adulthood better. Time to make the most out of your CPF, and win at it!

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Getting Married? Find A Good Financial Adviser!

Getting married? Find a good financial adviser

Getting married? Congratulations!

There’s definitely a lot of moving parts involved. You’re probably surrounded by well-meaning friends and relatives who are giving you tips for the big day and beyond. Let’s talk about one piece of advice that’s not given as often as it should be when people are getting married: the importance of finding a good personal financial adviser. A lot of people neglect the importance of budgeting when it comes to marriages, leading to massive debts down the road. In this article, fundMyLife shares the reasons why you need a good financial adviser when you are getting married.

Do you share a common dream?

Previously, we talked about ways couples can manage their money and how to stop fighting about money. However, besides having a conversation about the present, it’s important to talk about the future as well. Angela and Ben* want to build an asset base of $1 million in 20 years. This would provide them with sufficient passive income to quit their jobs and start their own business. After reading up on their own, they decided to invest $500 per month in a single investment.

It was only during their consultation with their personal financial adviser that they saw, based on their plan, that they would achieve only a small faction of what they wanted at the end of 10 years. In the absence of a personalized financial planning process, we often plan our finances without proper approaches. The information from these sources is often not catered to our specific situation, leading to mistakes like the one Angela and Ben made. Sometimes you and your partner may have blind spots due to emotional factors, or simply, a lack of financial knowledge.

Working with a personal financial adviser ensures that you cover all financial grounds. On top of that, your unique situation is taken into account in creating your personalized financial plan.

Can’t see the future together?

There is a saying – “a goal without strategy is called a wish”. We often think about the destination, but not necessarily the journey required. If you and your partner have clear goals in mind, but have no idea how you are going to get there, you should seek a personal financial adviser. The same applies if you can’t set clear goals together on your own. The best ones can tease out what you really want out of life.

Note: that sort of question is also a deep one and may require more self-reflection. Just don’t spiral into an existential crisis.

Can’t agree with each other?

If discussions about personal finances result in regular disagreements and heated quarrels, you may wish to engage the services of a counselor and/or personal adviser. There may be emotional blockages in the flow of communication that need to be addressed for the good of the relationship. Having a financial adviser in the picture may provide clarity and an unbiased view on how to discuss money. Besides, an experienced adviser would have advised other couples on their finances as well.

Ask fundMyLife financial questions today!

That said, having a personal financial adviser is not always necessary, especially if you have clear goals in mind, and have designed a clear path to get there. If you don’t know where to start to get to where you want to end, then having a personal financial adviser may be useful to you.

More importantly, if you don’t know who to ask or where to find amazing financial advisers, we got you. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our pool of financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Sometimes, all you need is a good third wheel before getting married.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Pros And Cons Of Getting Insurance From Just One Financial Adviser

Pros and cons of getting insurance from just one financial adviser

There is a saying, that “diversity is strength”. While this is true on many fronts, can we say the same financial planning and insurance? Throughout our lives, we inevitably meet a lot of financial advisers, and there is always a question of whether to engage more advisers. This is especially true when we move from one life stage to next. In this article, fundMyLife explores the pros and cons of having just one financial adviser for financial planning.

Pros of having just one financial adviser

#1 No need to repeat yourself

Having just one financial adviser, especially if he/she is great, is all you need. He/she understands all of your financial needs and advises on suitable products. In this case, you do not need to keep repeating your financial situation to different financial advisers – it can be repetitive and tiring. Furthermore, if you have just one financial adviser, you just need to update him/her in cases of changes in life stages, e.g., life stages, occupation, financial situation, etc.

Furthermore, if you have any private matters you do not wish to talk about often, it’s easier to have a single person to handle everything. The less people know, the better.

#2 No redundancy

While being under-insured is a big problem, being over-insured is also an issue that is less discussed. Being over-insured poses a problem because you’re paying more than you should, limiting cash flow for other purposes like investments. This happens commonly when you buy policies from multiple people, who are not aware of what existing policies you have. Typically, the policies you own sit in drawers, untouched for a while. This is worse when you get them for reasons other than personal, e.g., to “support” a friend or family who has gone into the financial planning industry.

By sticking to a single financial adviser, you avoid this possible redundancy. Speaking of being over-insured – you do not want to be in a situation where you’re more valuable dead than alive to your dependents.

#3 Single point of contact

Picture this: you bought a life insurance from A, health insurance from B, and a personal accident policy from C. After that, let’s say you get into trouble, e.g., accident, sickness, etc, you’d have to recall who can help you with your incident. During claims situation, you’d want a single person who has access to your entire insurance portfolio. The last thing you want to do when disaster strikes is needing to figure out handles which policy.

Cons of having just one financial adviser

#1 All eggs into one basket

While having a single point of contact is convenient and useful, it also exposes you to risks as well. For example, a common issue consumers face is their financial advisers leaving the industry. Your policies would become orphan policies, a term that refers to policies without any servicing adviser. At best, if your adviser is responsible, he/she refers you to a reliable colleague. At worst, you’re left hanging and when it is time to make claims you’d have to take extra steps to contact the representative the company assigned to you.

Another possible risk is that your adviser becomes unwell and has to take a break from his/her job. It would be a bad timing if you need to make your claims during their downtime.

#2 Limited range of products

Unless your financial adviser is from an independent financial advisory, your choice of plans depends on the company your adviser is from. As such, it might not be a bad idea to engage multiple advisers to obtain specific products from different companies. With apps such as PolicyPal, IOLO, and TrueCover, it’s much easier nowadays to keep track of all your policies.

However, this does not imply that sticking to one company’s products is a bad thing. Products are competitive across the board. Most of the time, the differentiating factors lie usually in gimmicks. For example, wellness programs like AIA Vitality, or partnerships between Prudential and genetic testing company MyDNA. On a related note, the debate of tied adviser vs independent financial adviser is a completely separate issue, which we will explore another time.

Ask fundMyLife financial questions today!

With this article, we hope that you have a better idea of how having just one financial adviser can be a boon or bane. However, no matter whether it’s just one financial adviser that you engage, or several of them for different products, it’s definitely way more important to have the ones you can trust.

If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our pool of financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

How To Stop Fighting About Money In A Relationship

Stop fighting over money in a relationship

Written by Daniel Tay, edited by Jackie Tan. 

We earn money with our blood, sweat and tears. We earn it with irreplaceable time and indeed our very lives. Earning, saving, spending, investing, and giving money all involve some kind of sacrifice, making money a highly sensitive subject even among couples. Read on to find out how to stop fighting in a relationship if you and your partner frequently quarrel over his/her spending habits.

Step 1: Understand the past

Firstly, understand that it may not be you or your partner’s fault. For example, we usually learn how to handle money from our first teachers – our parents.

Jane’s (not her real name) father was a problem gambler. He frequently borrowed money from family members including her, often not returning what he borrowed. Jane loved her father very much, and didn’t like to refuse when he approached her.

But Jane didn’t like to have to keep lending her dad money. Her solution was, from a young age, to spend all the money she had. That way, she didn’t have any money to lend.

Jane’s circumstances forced her to adopt a certain spending habit. If our parents handle money poorly, it is also likely that we will learn their habits.

Step 2: Communicate feelings

Jane brought her spending habit into adulthood, causing many problems in her relationship with her boyfriend. When he tried to rein in her spending, she would flare up and they would fight.

Communication about money, like all forms of couple communication, isn’t really about the money. It’s actually about the emotions behind that. Instead of saying, “Stop spending money already!” it may be more effective to tell your partner how you feel about his/her spending habit and why you’re feeling that way.

When two people come together, financial matters become intertwined. Financial decisions that were once straightforward may not work out so well anymore. Bringing up this fact may help your partner realize that his/her actions are affecting you.

Don’t ignore the problem

If you’re tired of fighting and thinking of closing one eye to your partner’s spending problem (either too much or too little) because it’s not hurting anyone yet, you’re setting your relationship up for failure. In fact, not communicating about money is a direct consequence of an even more serious problem in your relationship: not communicating about emotions.

When couples do not communicate with each other on their emotions, it implies distrust in each other. “I don’t trust that you will not judge me. I don’t trust that you will accept my feelings, my emotions.” Left alone for a long enough time, this distrust can destroy the relationship.

A challenge to overcome

It’s not going to be easy for your partner to kick or change his/her lifelong spending habit. You need to assess what this means for yourself and the relationship in the long run. In some instances, couples decide that breaking up is best.

However, don’t give up on your partner before the two of you have a heart-to-heart talk about it–the discussion may just spur your partner to realize how his/her actions affect you and take action. If both of you can work things out together, the fighting will stop and your relationship will emerge more resilient than ever!

A good financial adviser can also counsel those who are fighting over money in a relationship. Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Basics of Insurance

Basics of Insurance

Written by Letitia Jinghui Lean, edited by Jackie Tan and How To Adult. This was a guest post for How To Adult.

Self-sufficiency, or in easier terms, being able to cover your own ass just in case. What else does this remind you of? Yup, you guessed it – insurance. Think about having insurance as the ability to build your house from the ground after it gets blown away by the big, bad wolf. With insurance, you’ll save yourself the monetary stress!

7 Ways Couples Can Manage Their Money Without Fighting

Manage money without fighting

Written by Daniel Tay, edited by Jackie Tan. 

Getting together as a couple presents not only a new lifestyle, but also new ways on managing their finances together. It is said that couples often prefer to manage their money like how their parents did. However, a couple’s unique situation may require a style different from their parents’. Money is a huge factor in a couple’s relationship, and managing them is a key to either breaking or making it. In this article, we present seven ways of managing a couple’s finances.

#1 To Each His/Her Own

Each person handles personal finances in separate accounts.

Barry is a widower whose ex-wife had cancer. To pay for her medical expenses, Barry depleted his savings, borrowed heavily on his credit cards, and took personal loans. While paying off his debts, he enters into a new relationship with Iris. They want to buy a property together. However, Barry might be unable to take any loan, having maxed out his borrowing facilities. Barry and Iris keep their finances separate until his finances become healthier.

This way also works when:

  1. One party’s finances are much more complex than the other, e.g., one party has multiple sources of income
  2. One party has secrets to hide
  3. Mutual trust is lacking between the two
  4. Both parties spend money very differently or are unsure of their long-term commitment to each other

What is required:

  1. Simple financial planning
  2. Sophisticated estate planning, due to individually owned assets

2) What’s Mine Is Yours

Combine all finances in joint accounts.

Young adults Harry and Gwen have been dating for years. They have similar personalities, hobbies, and life goals. They do almost everything together. Each cares deeply for the other’s family. As they make similar financial decisions, they decide to combine their resources in a single account.

This works when a couple:

  1. Want to seal their long-term commitment to each other
  2. Have shared hobbies, combined financial goals, and straightforward finances
  3. Are close to their families
  4. Have mutual trust

What it requires:

  1. Sophisticated financial planning
  2. Simple estate planning with joint ownership of assets
  3. Open communication about each other’s spending

#3 You’re My Equal

Each person owns an account and contributes equally to a joint account.

In Diana’s family, the women are strong-willed. In Steve’s family, men make the decisions. Unable to agree on their money management, Diana and Steve hold separate accounts. However, they need to pay for their house and daily household needs. They pay for these expenses from a joint account to which they contribute equally.

This works when a couple has:

  1. Some combined financial goals, but want some independence.
  2. Roughly the same income
  3. Moved in together and have shared household expenses or shared savings goals.

What it requires:

  1. Complex financial planning and estate planning

#4 I Pay, You Save

One person pays for everything. The other saves/invests all of his/her income.

Scott and Jean want to take up a full-time university course, but cannot do so simultaneously. They first accumulate savings, living on Scott’s earnings and saving all of Jean’s earnings. After building their savings and emergency fund, Jean goes for full-time study. By now, they are used to living on Scott’s salary. When Jean finishes her studies, she finds a job with income roughly equal to Scott’s salary. Scott then goes for his further studies.

This works when:

  1. One person earns much more than the other
  2. A couple goes single income in future, as it disciplines them to survive on one person’s income

What it requires:

  1. An income replacement plan for the one whose income pays for all the family expenses, in case she/he becomes unable to work
  2. Family emergency fund
  3. Disciplined spending
  4. Budgeting for leisure

5) The Fair Treatment

Each person contributes an amount proportionate to his/her income.

Henry, a scientist, earns a stable income. His wife Janet starts an interior design company. At first her projects are intermittent. Some months she earns nothing. Hank contributes more to their shared account. Janet contributes when she can. When Janet’s business flourishes, she takes over contributing more to pay for their shared expenses.

This works when:

  1. One person’s income is much higher than the other’s, and he/she is uncomfortable with the other contributing the same amount.
  2. Both have different lifestyles.
  3. One party is switching career, or starting a business.

6) Pay As You Use

Each person pays for the products/services that he/she use more.

Peter is a photojournalist. Mary-Jane is a fashion model. To look her best, she uses beauty products and services. She pays for their magazine subscriptions, including her beauty magazines and Peter’s photography journals. Peter buys cameras, lenses, computers, and photo-editing software. He pays for the family computer and related online services.

This works when one partner:

  1. Does not want to pay for the other’s hobby
  2. Has an expensive hobby, like shopping, collecting luxury items, travel etc
  3. Uses a household service much more than the other e.g. internet, cable TV, garden services, etc

7) The Japanese Method

One person holds all the money and gives the other an allowance.

Clark comes from a rural Indian village. He came to Singapore to work in a tech company. His wife Lois, a homemaker, grew up in Mumbai and immigrated to Singapore. Knowing little about finances, Clark gives his monthly salary to Lois who makes the financial decisions. Lois gives Clark a monthly allowance.

This is useful when only one party knows how to manage money.

Risks:

  1. If the one managing the money becomes unable to do so, the other could be at a loss as to what to do.
  2. If the breadwinner manages the money, the other might feel a power imbalance in the relationship.

What it requires:

  1. An income replacement plan for the breadwinner, in case s/he becomes unable to work
  2. Family emergency fund
  3. Insurance for the non income earner because if he/she falls ill, becomes disabled or gets into an accident, the breadwinner may have to pay for others to look after the children and household or take time off and a pay cut to do it

At the end of the day, each couple has to decide which method best suits their preference and situation. A couple does not have to stick with one way all the way, because situations do change. And these methods are not mutually exclusive as different ways can be combined for certain situations. In addition, couples should seek the advice of a holistic financial planner to optimize their assets.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Basics of Financial Planning

Basics of Financial Planning

Written by Letitia Jinghui Lean, edited by Jackie Tan and How To Adult. This was a guest post for How To Adult.

Nothing in school ever prepares you for the tsunami of responsibilities that come with being an adult, you just get mercilessly thrown into the deep end. Suddenly, you’ve got bills to pay, budgeting to do, insurance to set up, and many other responsibilities that keep piling up!

And that’s only the tip of the iceberg.

The key is to take things one at a time, and breathe. In this article, we’re gonna simplify the mind-boggling concept of financial planning and provide baby steps you can take to set yourself up for financial success in the future.

Huh, simi ‘financial planning’ ?

It’s preparing for your future through evaluation of your current pay and desired financial future. By setting short-term and long-term goals, you’ll be better equipped and motivated to make good financial decisions and accumulate the wealth you need to meet said goals.

You could also think of it as building a house. A solid foundation is needed before everything else falls into place. Good financial planning also gives you that stable base, from which you can build your fortune to protect yourself and your family from the different types of personal disasters.

So, where do I start?

It is important to strategise. It is also equally important to remember that your strategy shouldn’t be set in stone. Your strategy should be up for re-evaluation and revision to match with the changing conditions throughout the years. You could start by:

Step 1: Determining your current financial situation

What is your current financial situation? This refers to your income, savings, expenses, debts and loans. If you are unsure, ask your parents – they’ll be sure to help! It’s good to have these information written out.

Step 2: Deciding on your financial goals

What do you wish to accomplish or own? It goes beyond saving money for that big-item purchase. Talk to your family or partner to get their advice. Ultimately, only you can decide on your goals and differentiate between your needs and wants.

Step 3: Identifying possible courses of action and alternatives

How can you achieve your goals? Here is where you become well-versed with different strategies. You could evaluate the benefits and risks of various solutions, and even get some answers from the Internet.

Step 4: Implement your financial action plan

When can you start? It’s time for you to select, plan and take action. Consult your financial advisor as they could speed up the process and help you make better decisions too.


If all these seem overwhelming, that’s because it is. It isn’t the easiest thing in the world, cus’ it actually takes plenty of time, effort and commitment – but it’s all for a better future.

In order to get a head-start on the financial planning process, here are some tried-and-tested strategies that others have used. Some of these points have already been touched on in our other posts, but hey – that just reiterates the importance of it, huh?

Set up a budget

Aha, if you’re wondering what this means, head on over to our ‘5 Budgeting Tips’ article. In this day and age, people still underestimate the impact of this strategy. You’ll be better equipped to cut down on unnecessary expenditure and direct your resources to where you want it to go, when you understand your cash flow.

Segregate your expenses into 3 categories: non-negotiables (eg. taxes, debt payments), important (eg. groceries and bills) and discretionary (eg. entertainment, shopping). You’ll be able to better prioritise – helping you achieve your financial goals!

You could even download free applications such as SeedlyPocket Expense and Expensify to help track your cash flow with ease. You’ll be surprised at how much you spend on unnecessary items! And yes, that refers to that pair of jeans adding on to your collection.

Create an emergency savings fund

As we’ve discussed in our ‘Save Money with 5 Simple Steps’ article, life is unexpected and anything can happen. It’s always good to be kiasu and start saving for that rainy day that could happen at any time (touch wood).

Separate your savings and spendings accounts

As mentioned by Kenneth Lou of Seedly during our Official Launch Party, it’s always good to separate your savings and spendings. You’ll be able to use every single cent of your spendings account, but never from your savings.

Easier said than done, but you could always automate the channelling of your finances into these 2 accounts by setting up a GIRO account. Let the bank do the hard work, while you watch your money grow! Thank you, compound interest.

You should aim to allocate less than half of your monthly salary to your spending account for all fixed and variable expenses (eg. bills, food, and entertainment), and the remaining amount towards your savings and investments. If you’d like to take it up a notch, set aside a small fixed percentage of your salary to invest – and work on making it grow from there.

Get insurance for yourself and your loved ones

As much as we’d like to be – nobody is invincible on this earth. So, if anything happens (touch wood, again), at least you’ll have insurance as a safety net, or a form of financial protection for you and your loved ones.

Get yourself a trusted insurance agent to help you with the purchase to avoid falling into the pitfalls and deathtraps of greedy money-sucking institutions. Or even suspicious ‘friends’ who are suddenly invested in your life and want to treat you to coffee, upon graduation.

Read financial websites

Get acquainted with websites such as Seedly and DollarsAndSense and don’t be afraid to ask for help! Yes, even those chat-bots on websites can be quite useful. Educate yourself to become financially literate, so as to be able to make better decisions as well.

Whether you’re a hustling millennial working hard to attain your dreams, or just plain sian about adulting – look for a trusted financial advisor. They should able to help you understand and work out the nitty-gritty details of good financial planning.

When the going gets tough, the tough get going! The earlier you start on financial planning, the faster you’ll be able to meet your goals and achieve your dreams. Go ahead, it’s time to turn those dreams into a reality.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

The Pros and Cons Of Buying An Endowment Plan In Singapore

This article first appeared on DollarsAndSense.sg

Commonly sold by both insurance agents and personal bankers, people in Singapore have varying degrees of understanding when it comes to endowment plans, sometimes, even after they have bought one.

Even among finance professionals, there may be different understanding of what an endowment plan is, and isn’t. Some advisors may look at endowment plans as a type of “forced savings”. Others may think of it as a tool for investment, while some may see it as an insurance policy.

In this article, we will look at some of the pros and cons of an endowment plan.

As there are many different types of endowment plans in Singapore, all of which, offering its own advantages (and of course, disadvantages), do note that our article may be a generalised take on the category as a whole.

Also, any reference we make in this article to actual products is simply for the purpose of education, and in no way, representing our approval or disapproval of these products.

Let’s start with some of the pros.

Pros Of Endowment Plans:

#1 Guaranteed Returns

Compared to investing in the stock market, endowment plans generally come with some form of guaranteed returns. As long as you pay all the committed premiums and hold on to the policy till maturity, you will receive the guaranteed returns.

Here’s an example based on the AIA Smart Growth (II).

Source: AIA

The illustration above is self-explanatory. The policyholder will have to commit to the annual premiums of $2,483.60 per year for 12 years, paying a total of $29,803.20. The policy matures after 21 years. If the policy is held till maturity, there is a guaranteed return of $35,000.

In other words, the minimum amount the policyholder will get is $35,000, regardless of the performance of the market.

If you were to invest on your own, there is no guarantee that you will be able earn additional returns, or even retain your principal. In extreme cases, you may even lose your entire principal.

#2 Non-Guaranteed Returns

Non-guaranteed returns can be seen as both a pro and a con. For now, let’s look at it as a pro.

Compared to other instruments such as savings accounts and fixed deposits, endowment plans are able to generate higher, non-guaranteed returns for their policyholders. These non-guaranteed returns is dependent on the performance of the insurer’s participating fund.

For example, in the case of the AIA Smart Growth (II), policyholders will earn an additional return of $19,028, if the participating fund achieves a long-term annual return of 4.75%.

The ability to generate additional, non-guaranteed returns, makes an endowment plan more attractive than a regular fixed deposit. This is especially so if the guaranteed returns from the plan already provide a similar return to what fixed deposits would be giving. In some sense, it’s almost like getting the fixed deposit returns plus a “bonus” non-guaranteed return, subject to the performance of the insurer’s participating fund.

#3 Some Insurance Coverage

Most endowment plans provide some form of insurance coverage as part of the overall benefit of the plan.

For example, Great Eastern provides a Flexi Endowment plan that offers coverage against death, terminal illness or permanent disability for the duration of the policy term. This provides some form of insurance coverage, on top of both the guaranteed and non-guaranteed benefits offered by the policy.

This is in contrast with regular investments that do not provide any insurance coverage in the event that a person passes on, even while they are investing for the future of someone important to them.

As such, endowment plans are popular among parents who would like to save and invest for their children’s education, since there is a guaranteed fixed amount given to their child, regardless of what happens in the future.

Cons Of Endowment Plans:

#1 Guaranteed Return Does Not Equate To Guaranteed Principal

One misconception to avoid when buying an endowment plan is to be assuming that the premiums you pay for the policy would automatically be guaranteed, and that you will receive all of it back, plus some extra, when the policy matures.

This is not always true. And you need to understand this for yourself to avoid major disappointment in the future.

Here’s an example based on a Straits Times article.

Source: The Straits Times

From the benefit illustration above, you can see that while premiums paid to date is $200,378, the guaranteed return at maturity is only $189,000. This may not look too attractive for a person who buys an endowment plan hoping to get guarantee returns from it.

At the same time, the death benefit in the example above is substantial. If death occurs during the policy term, a payout of $189,000 is given. In a way, the lower guaranteed payout is somewhat balanced off by the fact that there is significant insurance coverage during the policy term.

At the end of the day however, you need to ask yourself what is the reason for buying an endowment plan in the first place.

#2 Long Commitment Period

Typically, most endowment plans tend to have a period of between 10 to 20 years where you have to stay committed to the plan. This means 1) making prompt payment on your premiums and 2) not surrendering the plan.

Penalty for early termination of your endowment plan can be very costly. If you surrender your policy within the first few years, you may even get nothing back from your policy.

In our view, if you are unsure of whether you will be able to commit to the entire duration of an endowment plan, you would be better off just using a savings account and to do your own investing.

#3 Actual Investment Returns Are Lower Than Long-Term Returns Earned

Lastly, you should remember that the projected investment returns earned by an insurer’s participating fund does not equate into the actual return that you will be getting from your endowment plan.

For example, in the case of the AIA Smart Growth (II) plan, if the participating fund achieve an investment return of 4.75% per annum, the actual return to policyholder is 3.85%.

Endowment plans offered by different insurers will have their own benefit illustration. For example, here is an illustration extracted from NTUC Income.

Source: NTUC Income

Long-Term Average Return: 4.75%

Actual Return To Policyholder: 2.99%

By now, we hope that you understand enough about endowment plans to know that this does not mean the AIA plan is better than the NTUC Income plan, just because the spread is smaller between achieved returns and actual returns.

Rather, the two policies are not identical and hence, a like-for-like comparison is not possible.

Our point here is that if you are intending to buy an endowment plan for investment purposes, you should know for yourself the difference between long-term average return achieved by the insurer, and the actual returns that you are going to get.

Otherwise, you might unknowingly be buying a product that is more insurance-based, rather than one which is investment-based.

Summary

Here are the pros and cons of an endowment plan which you should fully understand before you even consider a policy.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.