Opinion

Look Out For These 3 Financial Red Flags Before Getting Married

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Joanne Poh

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Singaporean women have a reputation for being money-sucking gold diggers, or at least that’s what the regulars over at the EDMW forums would have you believe. Whether this rather unbecoming label is deserved or not, there’s no denying that Singaporean men and women alike need to watch out for certain financial red flags before they troop down to the good old registry of marriages.

No, you do not need to know the size of your spouse’s future inheritance or obtain a guarantee that he or she is going to make it as a wheelin’ dealin’ investment banker. But here are four things that might justify running away at the altar.

 

Lots of debt

If your spouse has a ton of unsecured debt, then beware. If anything happens to him or her, all that debt could fall squarely on your shoulders. Once you register your marriage, you could become responsible for the debts of your spouse.

Common types of debt to look out for include tuition fee loans from university—particularly if your partner had an expensive overseas education and took a bank loan to finance it. Credit card debt is also very difficult to pay off due to the high interest rates and can escalate scarily quickly.

It’s therefore very important that you fully disclose all your debts before getting married. Even if you don’t become legally obliged to pay the debts of your spouse, in practice many end up doing so to save their other half from bankruptcy.

If your spouse-to-be has a lot of debt that you’re jointly liable for, it’s a good idea to buy life insurance, so that if anything happens to him or her, you’ll have a pay out to cover the debts that you’ll end up having to pay. Use MoneySmart’s life insurance wizard to shop for the best policy.

If you do decide to go ahead and tie the knot anyway, be very wary of taking on joint debt, standing as a guarantor for loans, applying for joint credit cards or opening joint accounts, which can be frozen if your spouse goes bankrupt.

 

Spending more than they earn

Only a psycho girlfriend or boyfriend would keep track of their partner’s spending. Don’t start adding up every dollar your partner spends on dates, but do pay attention if he consistently spends more than he earns. If your partner isn’t able to make ends meet with his or her salary, that means that when you get married, that surplus is going to come from you.

There’s no shame in admitting you can’t afford your current lifestyle and need to cut costs. If your partner is brave enough to do that, by all means work together to find ways to lower your overheads, for instance by eating out less. It’s when your partner thinks his or her unsustainable spending habits aren’t a problem that you should beware.

For instance, I once overhead a Singaporean guy talking about how his girlfriend had quit her job and expected him to support her. If that happens to you, head for the hills.

 

Being dishonest about finances

While dishonesty about anything at all should raise a red flag, being sneaky about one’s finances is often overlooked. If your girlfriend tries to hide her shopping addiction from you, or your boyfriend is evasive about just why he needs to take that urgent bank loan, be very, very afraid.

Being sneaky about spending can result in a big blow when you realise your spouse has racked up huge amounts of debt that you, as his or her partner, are jointly responsible for. If your partner is going to drag you down with him or her, you want to at least know about it before it’s too late.

Even if your partner has way too much money to get into an uncomfortable debt situation, too much secrecy can still be bad news. Any estate planning lawyer will tell you that a rich client wanting to divide his wealth between two families in different countries, neither of whom knows about the other, is not uncommon.

Ultimately, it’s up to you how much you choose to disclose about your finances. Just make sure you’re not lying to each other or deliberately obfuscating the facts.

What other red flags should you look out for in a relationship? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.