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How to save money as a couple

19 December 2022 dot 6-minute read
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Knowing how to save as a couple strengthens financial stability and leads to experiences that matter the most. (Credit: Shutterstock) 
Raising kids or managing an extended family household can make money discussions challenging. Half the battle for couples is establishing open and honest communication lines, especially when you have differing attitudes on how to save money.
 
One way couples can practice transparency is to track monthly incomes and expenses on a budget planner spreadsheet or app. Both are powerful tools that help assess spending habits individually and as a family. It is important to use these tools for both personal and joint accounts to get full visibility over your finances.
 
Now, with all your financial data on the table, you can start talking about financial goals to prioritise, budget planning and how to put money away in savings. Here are some practical tips to get you started.

1. Make "S.M.A.R.T" saving goals 

Any financial goal has to be specific, measurable, achievable, realistic and time-bound, according to MoneySense, a guide from the Singapore governments national financial education programme.
 
"Evaluate your goals by determining the timeline, target amount, available savings and action plan to achieve each goal."

2. Create a percentage-based family budget

Create a budget for your combined income (after taxes). Arguably, the most popular percentage-based method is the 50/30/20 rule from the book All Your Worth: The Ultimate Lifetime Money Plan. Using this method, you need to allocate:
 
  • 50 per cent for needs (fixed costs like rent, utilities and debt) 
  • 20 per cent for savings (emergency fund, retirement and insurance)
  • 30 per cent for wants (entertainment, dining out and shopping)
This method makes tracking expenses convenient and easy to adjust whenever you have a new financial goal, like saving up for a house or preparing for a baby.
 
Depending on your kids' age, this budget can also help them understand your family's financial priorities. It's an excellent way to introduce children to what counts as a need and what counts as a want.

3. Prioritise emergency savings

The pandemic has pushed more households to prioritise an emergency fund as their top savings goal, according to the 2021 AIA Save Smarter Study. (Credit: Getty Images)
If you don't have one yet, make an emergency savings fund your top financial goal. A typical emergency fund contains about three to six months' worth of living expenses.
 
That being said, personal finance advisor Ramit Sethi, author of I Will Teach You to be Rich, encourages people to save even more. He recommends 12 months' worth of living expenses to ease financial security worries amid a global pandemic and volatile inflation rates.
 
In addition, couples may want to set up a separate emergency fund for family members who rely on them financially. Should the unexpected happen, having two emergency cash reserves prevents the added strain of rebuilding emergency savings from zero.

4. Set aside savings for insurance 

Set aside savings for medical protection insurance for the household. Explore life insurance plans that act as savings products. These policies provide you with annual dividends, which you may choose to receive in cash. Some policies also make it possible to earn interest if you let the money accumulate.
 
Savings insurance can be an additional source of retirement income, so your kids don't have to worry about your future financial wellbeing.

5. Automate saving and investing 

Automating your finances ensures that bills get paid on time and no costly late charges are incurred. Do the same for your savings. With the help of your bank, arrange automatic transfers from your paycheque to a savings account earmarked for emergency or retirement income.
 
Finance experts suggest "robo-advisors" for beginner investors who may not have the time or resources to manage investments regularly. A robo-adviser is a digital platform or service that automates most tasks done by a human financial advisor. It uses algorithms to create and manage your investment portfolio based on information like financial goals, income, time horizon and risk tolerance. It's also more affordable than a human financial advisor.
 
"[Robo-advisors] typically have very low minimum investment requirements, low fees, regular and automatic portfolio rebalancing, and automated investing, and in many instances, they allow you to purchase fractional stocks," writes Bola Sokunbi in her book Clever Girl Finance: Grow Your Money.
 
However, Bola points out in her book that robo-advisors cannot discuss "unique life circumstances or investment objectives. "Most robo-advisor firms also provide human advisors at an additional cost.

6. Consider a joint account

Setting up a joint account for savings is a personal decision. Whether you have one depends on how you decide to manage finances as a couple. (Credit: Shutterstock)
A joint account can lead to better money conversations. But couples need to agree on its purpose and how to maintain the account.
 
Bola, a certified financial education instructor (CFEI), writes in her blog, "Part of having joint accounts means discussing with your spouse often (or at least you are forced to). It can make it easier to save up for purchases, vacations and more when you're both contributing to the funds."

7. Have a "pre-conflict warm-up" for money talks

Discussions about money can be stressful and filled with apprehension. Some couples can articulate their money views well, while others find these talks challenging and avoid them altogether. Moreover, conversations about money can be awkward and complicated with extended family members, depending on the type of contribution they make to the household income.
 
Avoid fault-finding to have productive dialogues on finances, personal finance experts advise. Maintain a frank but friendly tone to put your partner at ease, and catch yourself if you're doing more talking than listening. You may also want to consider having a family friend or financial counsellor mediate if conversations about money tend to spark conflicts.
 
For couples who are the decision-makers on money, a different kind of preparation may be helpful. Drs John and Julie Gottman, psychologists known for their research on relationships and families, suggest a "pre-conflict warm-up."
 
First, find a place with few distractions and keep phones on silent. Start the meeting by taking turns sharing five things your partner did that you appreciate. Finish by expressing gratitude for what your partner shared. According to the Gottmans, couples in long-term relationships often forget this courtesy because they brace themselves for conflict.
 
A pre-conflict warm-up designed to show recognition and give thanks will help defuse any tension. It paves the way for productive, rather than defensive, dialogue. Most importantly, it creates a space where both partners feel heard and understood, so conversations about how to save money become a genuine "we" effort.
 
Having the choice to live the kind of life you want starts with a strong financial foundation. In this episode of AIA Voices, finance expert Anna Haotanto shares the six steps towards financial success.
 
 
AIA Voices is a community of influential and educational voices from around Asia to talk about life, health and wellness. A platform to educate, motivate and inspire people to make positive behavioural changes on their health and wellness journey. Providing an opportunity for communities across Asia to connect, collaborate, and learn from each other. Designed to drive AIA One Billion, our ambition to engage a billion people to live Healthier, Longer, Better Lives by 2030.
 
 
References:
 
MoneySense. 2022. Getting Married - Planning Your Finances Together. [online] [Accessed on 8 August 2022] 
 
John Wiley & Sons, Inc. Bola Sokunbi. 2021.  Clever Girl Finance: Grow Your Money.[offline] [Accessed on 20 July 2022] 
 
Clever Girl Finance. 2022. Is Opening a Joint Bank Account a Good Idea? [online] [Accessed on 8 August 2022] 
 
I Will Teach You To Be Rich. 2021.   How Much Should you Save Per Month?  [online] [Accessed on 8 August 2022] 
 
The Gottman Institute. How to Strengthen Your Relationship with State of the Union Meetings.  [online] [Accessed on 8 August 2022] 
Disclaimer:
This is general information only and is not intended as financial, medical, health, nutritional or other advice. You should obtain professional advice from a financial adviser, or medical or health practitioner in relation to your own personal circumstances.