Couple’s guide to shared budgeting

By Lynette Tan

If you’ve only got a minute:

• Having a shared financial plan begins with talking about your individual finances as transparency builds trust and sharing responsibility ensures fairness.
• From short-term budgeting to saving for long-term financial goals, planning your finances as a couple provides significant benefits, but the journey may not always be smooth sailing.
• Building a secure financial future is a team effort, made stronger through good planning, regular reviews and understanding each other’s needs and aspirations.

Taking control of your finances as a couple isn't just about numbers. It's about building a strong foundation for your shared future. Shared budgeting fosters open communication, allowing you to discuss financial priorities, understand each other's spending habits and work together towards common goals.

This transparency builds trust and strengthens your partnership, while shared responsibility ensures fairness and prevents one person from shouldering the entire financial burden. With a collaborative budget, you can more easily achieve significant milestones like buying a home, starting a family, or planning for a comfortable retirement.

While the benefits of shared budgeting are significant, it's crucial to acknowledge that the journey isn't always smooth sailing. Differences in spending habits, past financial traumas, or differing financial philosophies can create friction. However, these challenges are surmountable. This guide provides a supportive and solution-oriented approach, empowering couples to navigate these potential hurdles and create a financial plan that works for both of you.

Assess your financial situation

Before embarking on the journey of shared budgeting, it's crucial for each partner to take a personal inventory of his/her financial health. This involves a frank assessment of your individual income and expenses. Don't shy away from listing outstanding debts, including credit cards, loans and any other financial obligations.

You can use a digital tool like the “Plan” tab in DBS digibank to have a bird’s eye view of your financial situation, especially if you sync it with SGFindex.

Equally important is evaluating your savings, investments, and any assets you own (like property and vehicles), alongside any liabilities. This detailed individual assessment provides a clear picture of your personal financial standing, setting a solid foundation for a discussion on your finances and the action steps to take.

The next, and perhaps most important step is to have an open and honest conversation about your findings. This isn't just about numbers. It's about sharing your financial history, anxieties, and past experiences. Some may have experienced financial hardship, while others may have grown up with different financial mindsets. Openly addressing these emotions and perspectives is key to building trust and ensuring that your shared budgeting process is collaborative and respectful.

Choosing a budgeting method

Choosing the right budgeting method is a crucial step in your shared financial journey. One popular approach is using a joint account for shared expenses and savings, streamlining bill payments and simplifying financial tracking. However, this method requires a high degree of trust and shared financial decision-making.

Alternatively, some couples prefer maintaining separate accounts while pooling funds specifically for shared expenses like mortgage, utilities, and groceries. This allows for greater individual financial independence while still sharing essential costs.

Many couples successfully share expenses using different methods. Some opt for a simple 50/50 split, where all bills are divided equally. Others prefer a system based on income proportion, where the higher earner contributes a proportionally larger share. A third approach involves dividing bills based on individual responsibility, so one might cover the mortgage while the other handles groceries.

However, when incomes significantly differ, or one partner experiences unemployment, establishing a fair system can be tricky. For the primary income earner, maintaining balance and fairness can feel challenging, potentially leading to unspoken resentment. Open and honest communication is vital. Collaboratively designing a system that meets both partners' needs and acknowledges individual circumstances ensures a more equitable and harmonious financial partnership.

Ultimately, the most effective method is one that is tailored to your unique circumstances and preferences.

Creating your shared budget

Building your shared budget involves a systematic approach to understanding and managing your combined finances. You can follow the following steps:

1. Track your spending – tracking your expenses for at least 2 months to gain a clear picture of where your money is going.
2. Categorise your expenses - group them into essential areas like housing, transportation, food, and utilities, alongside discretionary spending such as entertainment and dining out.
3. Prioritise your essential needs and align your expenses to your shared financial goals - whether it's saving for a downpayment, paying down debt, or building an emergency fund. You can use the “pay yourself first” method by shifting money immediately to a separate account for savings once your pay is credited, to prioritise savings.
4. Regularly review and adjust your budget to reflect changing circumstances, income fluctuations, or shifting priorities, ensuring your financial plan remains relevant and effective.

Shared goals for investing and retirement planning

Building a secure financial future together requires defining shared long-term financial goals, beyond your day-to-day spending and budgeting. This process involves reviewing your insurance coverage, identifying your aspirations such as purchasing a home, starting a family, or ensuring a comfortable retirement. These shared goals will shape your investment strategies and guide your financial decisions.

Determine a savings plan that reflects your combined income and retirement goals. Building an adequate emergency fund to cover unexpected expenses - job loss, medical emergencies, or home repairs - provides financial security and peace of mind, protecting you from unforeseen circumstances that could derail your long-term financial plans.

While delving into complex investment strategies is best left to financial professionals, understanding basic concepts like diversification (spreading your investments across different asset classes) and risk tolerance is vital. Couples can choose to either invest with their own accounts or open a joint investment account to grow their wealth together. For a start, you can consider investing shared funds into a diversified portfolio, while having individual investments for tactical investments. Openly discuss your risk tolerance and align your investment choices accordingly.

Equally crucial is planning for retirement as a team. Contributing to retirement accounts like CPF and Supplementary Retirement Scheme(SRS) can provide financial security for your retirement, and the earlier you begin, the better. Furthermore, topping up each other’s CPF account through the Retirement Sum Topping Up Scheme (RSTU) can provide tax relief of up to $8,000 a year, subject to a total personal tax relief of $80,000.

Mastering shared budgeting and managing your shared finances is a cornerstone of a strong and thriving financial partnership. By openly communicating, collaboratively setting goals, and regularly reviewing your budget, you can improve your financial health and strengthen the bonds of your relationship.

Remember that consistent communication is key to navigating any challenges that may arise. Regularly revisiting your budget allows you to adapt to life's changes and ensures your financial plan remains relevant and effective. Embrace this journey together, celebrate your successes, and remember that building a secure financial future is a team effort, made stronger through understanding, compromise, and unwavering support for one another.

Ready to start?

Check out digibank to analyse your real-time financial health. The best part is, it’s fuss-free – we automatically work out your money flows and provide money tips.

Plan with DBS  Plan with POSB

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

Let's Meet

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.