Affirming the power of couple-hood in personal finance

MARRY a rich partner and one’s life is materially transformed. However, the path of climbing the economic ladder via marriage may not be easy, as many people choose partners with similar educational and socio-economic backgrounds.

Getting legally married has benefits from a personal finance angle. For Singaporean couples, the financial advantages of marriage can come in three areas, namely homeownership, insurance and investment.

Property

Firstly, the homeownership journey for couples who are Singapore citizens typically starts with the purchase of a flat directly from the Housing and Development Board (HDB). Some couples are eligible to receive housing grants when buying HDB flats or executive condominiums (ECs).  

Setting aside housing grants, the flats bought from HDB are at subsidised prices. A couple who buys a S$600,000 Build-To-Order (BTO) flat may be looking at a mark-to-market gain of around S$250,000. Subsequently, some couples may recycle profits made from selling their BTO flats to help buy a private home, which could appreciate in price over the long term.  

In contrast, singles may have to wait until they are 35 years old before they can buy a flat from HDB and are restricted to buying smaller-sized units.

Moreover, couples who bust the income ceiling of S$14,000 per month to buy BTO flats, but meet the income ceiling of S$16,000 per month, can buy new ECs. New EC units could cost around 20 per cent less than new comparable private condominium units. After 10 years, ECs can effectively enjoy the same status and possibly pricing as private condominiums.    

A couple also enjoys the advantage of being able to own one private home for owner occupation and another for earning rental income without incurring additional buyer’s stamp duty (ABSD), as long as the two homes are held under separate names. For Singapore citizens, the ABSD rate for the purchase of a second home is 17 per cent.

Insurance

Secondly, marriage may be the best insurance policy that one can get. Sure, there are insurance policies and riders that cover various events. But premiums can add up to a rather hefty sum, and one may have omitted getting a policy or rider that covered a particular event.

For couples on dual incomes, the risks of job disruption and retrenchment can be mitigated. If one partner loses a job, the other partner may still be able to service the mortgage loan repayment, so the family is not caught in a vicious cycle that could arise when loan repayments cannot be made on time.

With a couple, there can be flexibility for one partner to go without a pay cheque while retraining for opportunities in a field that has better prospects. Also, one partner can pursue the entrepreneurial path, while the other holds a steady job.

Given the importance of networking, some couples may be able to tap each other’s networks to help advance their careers.

While one’s partner can be a good insurance, couples should not neglect taking up insurance policies that deal with unfortunate situations such as the untimely demise of one’s partner.

Investment partners

Thirdly, being married may be helpful for one’s investment journey. Some people may be aware that investing is important, but have little interest or expertise in this area. For such persons, it helps to have a spouse who can look after financial investments. After all, a spouse can perhaps be trusted more than any financial adviser to help one manage one’s financial assets.

Ideally, a couple can be partners in managing their investments. Perhaps one person can specialise in bonds and real estate, while the other focuses on equities. Alternatively, one partner may focus on the Singapore market and the other on overseas markets.   

Investing can be a rather lonely journey as one may spend time tracking corporate announcements, reading analyst reports, perusing annual reports and consuming business news. When I was a sell-side equities analyst, I think a value-add that I brought to portfolio managers and analysts of institutional clients was to be a sounding board. Perhaps investors were happy to have their assumptions challenged or confirmed, and to access other viewpoints.

When one’s spouse is a partner in analysing investment opportunities, better investment decisions can potentially be made through seeing opportunities from different angles and having frank discussions with a trusted party.

Certainly, some married couples face huge financial pressure from having to help provide for two sets of elderly parents plus dependent children. While school fees at local schools are low for citizens, many parents pay princely sums for various tuition classes and enrichment activities. Hefty bills may also be racked up when children pursue further education overseas, perhaps because they could not secure a place for their chosen course of study at local universities.   

Nonetheless, in Singapore, the government has helped many parents cope with the cost of bringing up children and managing healthcare costs for the elderly.

While marriage can bring financial benefits, couples may wish to be mindful of the financial wreckage that divorce can cause. There were 7,890 divorces and annulments in 2021, up 13.4 per cent from 6,959 in 2020. Among married residents aged 20 and over, there were 7.2 male divorcees per thousand males, as well as 6.9 female divorcees per thousand females.

In a divorce, assets may need to be liquidated, possibly at inopportune times. There are also costs involved in liquidating assets, and some couples may incur legal fees to sort out the division of assets. All this comes on top of the loss of economies of scale from sharing a car, a place to live and daily expenses.

In 2021, the proportion of residents aged 15 and over who were single, married, widowed and divorced or separated was 31.3 per cent, 60 per cent, 4.6 per cent and 4.1 per cent respectively.

Marriages that result in babies being born can contribute to the national good, especially in a fast-ageing Singapore. Still, decisions on marriage and having children are very personal choices. Some people can find joy without having a partner for life or kids.

Nonetheless, getting married and working to keep the marriage going can confer advantages from a personal finance viewpoint. In a tough investment environment, count on strong partnerships to get an edge.