Financially Prepare your Spouse in order to Simplify

by B Simple

in Planning

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Simplify your personal finances by making sure your spouse or loved ones have an understanding of your financial picture. In many households the husband or the wife is the sole chief financial officer in the household. This means that the chosen individual handles all or the majority of the family financial matters without the much involvement from other spouse. This can cause financial stress if the CFO of the household becomes ill and unable to manage the household finances or even worse passes away. This leaves the other spouse the non-CFO trying to figure out what is going on and is left to manage the finances of the household. This can be very challenging task especially for someone who has never managed the finances before and all of a sudden is forced into that role. To lessen the burden on your spouse and loved ones who must now manage the family finances here are some tips to help simplify your finances:

Make them aware of the location of all financial documents – Whoever will handle your finances should know where to find such documents as the will, account statements, life insurance, retirement statements and banking account statements. Many of us use online banking so make sure that individual has your passwords for all online access. Make a list of all family accounts and account  numbers.  Take the time to update this list whenever you open or close an account.

Know who to contact – This is just as important as knowing the location of the documents. Make sure they know the name and contact information your accountant, attorney, and investment advisor as well as bank representative. Any other person who has knowledge of your finances.  By knowing these individuals your spouse will be able to reach out to them for help if needed.

Know investment objective – How are your assets currently being managed? If something happens to you or your spouse your financial circumstances will change and your investment objective may change as well. You want to make sure your investment objective is in line with your current circumstance. For example, if you have a growth objective and now you will need income from your investments you will have to adjust your investment objective.  So make sure you are aware you how your investment are currently invested. This free investment advice may help.

Know your current financial picture – You want your spouse to know all of your income sources, assets, and debts so they can step in an manage your finances immediately. Knowing this information puts them in a better position. Provide full disclosure. Keep an updated personal financial statement with your financial documents.  Your personal financial statement should show all of your assets and liabilities as well as your income sources.

Know what funds are available – If something happens to you will your loved ones have sufficient funds to take care of you as well as funds to support them. Discuss what life insurance is in place if any and if there is disability insurance in place to replace your lost income.   Review to make sure its enough if you are not there.

TAKE ACTION by making sure the non CFO in your household is aware of all five tips in case something happens to you. Its always better to be prepared then unprepared. By knowing this your spouse will have a much easier time handling the finances if you are not around. They will have enough to deal with if your not around so simplify it for them while you can.

Remember in order to simplify your personal finances you must take one step at a time.

{ 9 comments… read them below or add one }

Kevin@OutOfYourRut

This is the reason why my wife and I share management of our finances. We never wanted to be in a position where one is gone leaving the other in a state of confusion. It always seems that if something is going to happen to either spouse, it will be to the money manager spouse.

We keep each other aware of accounts and paperwork, and both handle paying the bills and other financial transactions. The upshot is that neither of us worries about our own or the other’s ability to handle the finances in a crisis. That alone makes any crisis seem more manageable.
.-= Kevin@OutOfYourRut´s last blog ..Entertainment For Less =-.

Jason @ Redeeming Riches

I’m constantly amazed at how many spouses don’t share a lot of information with each other. Good post!
.-= Jason @ Redeeming Riches´s last blog ..Will You Have Enough Retirement Savings =-.

Greg McFarlane

It’d also help to share your financial details with every family member, even though no one does this. “What if Junior tells the neighborhood kids how much money we have? The neighbors will think less of us!”

Blissful ignorance never works in personal finance…at least not that I’ve ever seen.

JoeTaxpayer

Excellent advice here.
Some view this as a chore and it may be, but I’ve seen examples of what you are trying to prevent. A surviving spouse hardly knowing how to balance a check book, and trying to put the financial puzzle in place, not understanding what’s where.

If I may add one item to your list?
Within the paperwork tracked – review and update the beneficiaries on a regular basis. What a shame it would be for an ex-spouse (or her kids by second marriage) to inherit money (via IRA or 401(k)) by your oversight in not being aware of, and updating the beneficiaries. Note that the beneficiary listed on these accounts takes priority over any will in place.

B Simple

Joe, Thanks for the comment. That’s an excellent point that you make. That would not be a very good situation. By simply, reviewing the beneficiaries you can prevent a lot of headache.

B Simple

Kevin, Thanks for the comment. If more people followed your lead many crisises could be prevented. Its hard enough to deal with an illness or death of a spouse then to add an additional issue of the financial situation.

Jenn

We have an Excel document with multiple components: spending plan/budget, networth calculations, and most importantly a complete process document on setting up the budget plan for the next calendar year, lists of account numbers and passwords etc. I typically do all the day to day updating and tracking, but we have regular conversations about where we should be focussing the weekly transfers we do with all the excess cash not needed to cover our expenses. Normally we live on about 55% of our take home so every week I transfer the excess to our retirment accounts or make an extra mortgage payment. We regularly discuss if there should be some change to that routine, to pay for a vacation for example.

While I love to dive into the details my husband is happy to hear the high level summary and progress on our objectives on a regular basis. He is also an Excel ninja and could easily pick it up should the need arise. In addition to residing on my personal memory stick, the file is regularly backed up on to aother memory stick we keep in a secure location. Worst case he’d have to redo the last week or two of updates if I hadn’t just updated our back up copy.

emt training

Wow this is a great resource.. I’m enjoying it.. good article

Janeen

Oh boy, all of my paperwork is together, but all I have for any sort of instructions is a hand-scrawled note. Thanks for the encouragement to rectify this. I have “The Big Book Of Everything” from ErikDewey.com on my desktop with every intention of filling it out someday. I think I’ll make it a new years resolution.

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