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.