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How To Deal With 3 Big Life Transitions

Marriage. A career change. A baby on the way. These events are exciting, but equally unnerving. Many have asked how they can get their finances in order ahead of these major transitions. Here are some tips.

Getting married

Here’s how to manage your money with your new spouse:

  1. Opening the right joint bank account

Couples usually open a joint account to maximise the interest they can earn. There are two main types of joint accounts:

  • Joint-Alternate — Both husband and wife can withdraw and deposit into the account without permission from the other party.
  • Joint-All — Any transaction carried out from this account requires permission from both parties.

Talk to your partner about which account suits your family best. Find a joint account that allows you to get the most benefits based on your total combined income and eligible transactions.

If you invest in stocks, credit the dividends into the joint account. Most banks offer higher interest for doing so.

2. Regular financial updates

Have regular and open discussions about your family’s finances with your partner so that you have a better understanding of each other’s worries and spending habits. This helps you to avoid major disputes that could affect your relationship.

3. Check for tax benefits

In Singapore, you qualify for a S$2,000 spouse relief if:

  • Your spouse was living with or supported by you the previous year; and
  • Your spouse did not have an annual income* exceeding S$4,000 the previous year.

Taxpayers with handicapped spouses for a S$5,500 tax relief.

If you are a National Servicemen’s (NSman) wife, you qualify for a S$750 tax relief if:

  • You are a Singapore Citizen in the preceding year; and
  • Your husband is eligible for NSman Self Relief
  1. Sign a prenuptial agreement

Having a prenup simplifies the process in the event of a divorce. The agreement will clearly state how assets like property and bank savings will be divided, as well as how both parties will provide for their children going forward.

In Singapore, the agreement has to be made before the marriage and it takes effect once the couple marries. Both parties must declare all their tangible and intangible assets and liabilities such as credit card debts and loans.

A prenup reduces the divorce cost as it will be unnecessary to hold extended court hearings on how assets should be divided. Any property you owned before getting married will remain with you following the divorce.

Debts will be stated as either shared debts or separate debts. Both parties are responsible for shared debts after the divorce, while only the person who incurred the separate debt or agreed to shoulder it will be accountable for that debt.

If you are a business owner, high-income earner, or an individual who owns valuable property or received a substantial inheritance, we recommend a prenuptial agreement as it only costs S$800 to S$1,500 and leaves you with a peace of mind.

A new job

Whether you have switched companies or got a promotion, a new role always brings with it new questions about how your finances will look like. Here are two things to pay attention to:

  1. Check how much you will pay in personal income tax based on your income. You will have a more accurate view of your take-home pay and be able to adjust your savings goals accordingly.
  2. Review your company’s benefits, including stock options, deferred compensation plans, or options to purchase equity in the company. Check with your financial adviser what you should do based on your goals.

Welcoming a child

Having a kid brings great joy but also anxiety, especially when it is expensive to raise a child in Singapore. How can you plan for your baby’s arrival?

  1. Update your budget

Add in baby-related expenses such as baby supplies and childcare costs. Factor in any cuts in household income if one parent decides to work part-time or stay home to take care of the child.

2. Review your insurance policies

Opt for maternity insurance to cover unexpected pregnancy complications, and look for health policies that will adequately cover your children even if your company offers health insurance.

The earlier your child is covered, the lower the premiums. Check out this financial to-do list ahead of your baby’s arrival.

3. Take advantage of all the tax relief programmes and government grants offered to parents

In 2020, the government introduced a one-off S$3,000 Baby Support Grant to encourage couples to start a family despite the pandemic. Parents qualify for the grant if their children were born between 1 October 2020 and 30 September 2022. You can check if you are eligible for the grant here.

Parents are also entitled to tax savings such as the Parenthood Tax Rebate, Qualifying Child Relief, and Working Mother’s Child Relief.

And before you enrol your child in preschool, study what government preschool subsidies you can apply for.

Transitions are tough, but make it easier on yourself by following these steps. If you need more advice, drop us an email at ask@plannerbee.co and we will be more than happy to chat!

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