By now, you probably don’t need to be reminded that money plays a role in a large percentage of arguments between spouses. Sometimes these arguments are rooted in a lack of communication, clashing values, or a power struggle, and sometimes they happen because one spouse is not involved in the daily maintenance of the household finances.
In households where one spouse shoulders all of the financial responsibility, that spouse is typically the husband. It is also common for wives to handle bill paying and shopping while husbands manage the big picture planning, such as retirement accounts, insurance and tax planning. On the other hand, there are a lot of women who are increasingly taking the financial responsibility for the household onto their own shoulders. Of course, you should do what works for your marriage and split responsibilities accordingly, but it’s also important that both you and your spouse are financially literate and aware of family finances, even if you don’t personally sign off on the mortgage payment each month.
Why it’s Important
Death, divorce, disability, and other unforeseen circumstances can lead to financial ruin for anyone, man or woman, who is not capable of handling finances.
Additionally, financial literacy can bring peace of mind in the following ways:
Planning for retirement now makes you less likely to worry about money later on.
Learning about personal finance helps you better understand how your lifestyle is funded and how to afford the lifestyle you want in the future.
Being deliberate with your spending and saving puts you in control of reaching your future goals, such as sending your children to college or buying a house.
Taking control of your money is the best safety net you can have. No one cares more about your money than you do.
Shirking your responsibilities can leave your spouse feeling resentful or cause a power imbalance in your marriage, but talking about money can make your relationship stronger.
To safeguard your future and attain peace of mind, it’s important for you to learn about personal finance concepts and make yourself aware of what is happening with your money. You should play a role in any decision-making when it comes to spending, saving, and investing.
If you are newly married, work through these strategies with your spouse, if you have been married for a longer period of time but would like to be more involved, communicate with your spouse your intentions and wishes to play a bigger part in financial decision-making. Tell them your concerns and why it would benefit both of you if you were both responsible for financial tasks.
It’s important to develop strong communication skills when talking about your money, because it can be an uncomfortable, emotional topic. Try to understand your spouse’s money philosophy, background experiences with money, and personal financial goals, and make sure they understands yours, too.
To get the discussion rolling, start by talking about the following topics:
Income: Talk about how much each of you makes, how much you hope to make in the future, and whether one of you will stay home with future children.
Expenses: What are your recurring bills (monthly, quarterly, etc.) and how much can you expect to spend on other necessities? Discuss your priorities, how much you can each spend without consulting the other, and what you consider needs versus wants.
Goals: Make sure you’re on the same page when it comes to short- and long-term goals, and make a plan to reach them.
Investing: Whoever is more confident with investing terminology should get the other up to speed, so you can speak confidently and agree on a risk tolerance and asset allocation.
When your spouse meets with your financial advisor, make sure to attend those meetings, if you aren’t already, and play an active role in the meetings. Ask questions about anything you don’t understand and make sure your opinions are being heard.
Your spouse may already have an organizational system that works for them. Ask them to explain it to you, or decide on a system that works for both of you. Your system could be a spreadsheet on your computer, online banking, or even a pencil-and-paper ledger. You’ll also need a filing system to organize old bills, insurance policies, and other important documents.
You and your spouse should both know how to easily access:
Your birth certificates and marriage certificate
All bank and brokerage accounts
Deeds and titles to property
Debts and monthly bills
Your will, living will, powers of attorney, etc.
You should organize passwords, contact information, and important paperwork so either spouse would be able to carry on without the other. You should also know where all of your assets are and how to access them, who owes you money, and whom you owe money to. Once you’ve gotten familiar with your own financial state, seek out books, blogs, and other sources for more knowledge on the topic of personal finance.
Budget: Look at income and expenses for the past several months and put together a budget with your spouse, allocating funds for saving, discretionary spending (fun money), and necessities. Then, track your spending in whatever system you created, and keep an eye on your budget to make sure you don’t overspend.
Insurance: Read over your current policies and learn all about your coverage –deductibles, copays, premiums, what’s covered, how to collect, and how to contact your agent. Do an insurance audit and decide if you have enough or too much coverage, and adjust accordingly.
Investing: Learn about basic investing vehicles and concepts, and look over your current investments to decide if they are right for your family. Work with your spouse to determine an investing plan that can help you meet your goals.
Estate plan: Make sure you have an updated will and beneficiaries as well as trusts, power of attorney, and any other documents you may need. Keep these documents somewhere safe where you could access them if needed. Also, find out which accounts name you as a beneficiary, such as life insurance policies or retirement accounts.
Credit: If you don’t already have a credit card in your name, sign up for one. Make sure any assets you share with your spouse (house, investments, car, etc.) are in both names. Your credit score is not the same as your spouse’s, and if everything is in their name only, you may be left with no credit history should a divorce occur.
Financial literacy is important for both members of every marriage. From being able to make important decision with your spouse to knowing what to do in an emergency, it is important for you to know what your financial picture looks like. If you have any questions about how you can divide responsibilities, or if you just want to learn more about your financial picture, call our office at 801-871-3897 to schedule an appointment.