This blog is for couples: new couples, elderly couples, married couples, loving couples, divorcing couples, in all cases, partners as it relates to finance.
Let’s start with the (unfortunate) fact. There is something inevitable in any relationship. The end. Relationships, as we know them, come to an end. Sometimes it is a natural and peaceful closure, and sometimes it is a heartbreaking and awful ending. Whether it is a breakup or death, the separation is real, and knowing one’s finances can be invaluable to one’s financial well-being going forward.
If you are still reading, you’re probably in a relationship, and you probably trust your loved one, and your partner trusts you. This trust extends to finance. Wonderful! However, we don’t know what tomorrow will bring, and as uncomfortable as that thought might be, being prepared is more than important, it’s crucial.
Know your finances!
Here are several questions to ask yourself to see who manages the finances in your relationship and if you are in the ‘know’. Who pays the bills? Who creates the budget? Whose name is on the accounts, assets, and loans? Who is listed as the beneficiary? What are the household income sources? Who compiles and files the taxes? Is there a life insurance policy or a safe deposit box? And for well-established couples with property or children, do you have a Will or Trust?
Note: There are templates to help create budgets, list accounts, and organize end-of-life wishes. Wealth Analytics created a ‘Final Letter of Instruction’ template to get you started (email service@wealthanalytics.com).
Another part of the ‘know your finances’ equation is discussing and understanding your financial goals – both individually and together as a couple. What is important to you and what does that cost? What goals do you agree on? Are there goals that haven’t been shared or goals that need more discussion? Once common goals are established, there is unity and more willingness to work towards them as a team.
Get access!
Even if financial duties are shared or split to manage the load and/or the skills and interests of the partners, both parties need access. Do you have the credentials to log in and see activity on joint accounts, and household bills? Do you know the name and contact info of your accountant or financial advisor? Where do you store your passwords?
Note: There are cloud-based password managers that not only make it convenient for couples to store and share passwords, but also offer security and password protection.
Take turns!
There is true value in ‘doing’ the finances, even if just once. If you’re the bill payer, guide your partner through the process next time around. If you haven’t participated in filing the taxes, have your partner let you take the lead next year. Try to attend financial meetings together, as a team, even if it’s not your thing.
Get help!
When it comes to making financial decisions, always participate. Ask questions. Consult and hire experts when needed. In the same way you take care of your physical health, like regular visits to your doctor, frequent exercise, and good nutrition, care for your financial well-being. One of the most effective ways to understand your finances is to commit to creating a financial plan – as a couple. Certified Financial Planners and fiduciaries meet with couples, review all financial documents, and create financial plans around the couple’s goals.
Note: If there is a large imbalance in accessing and understanding financial information between partners, even if there is trust, hiring an objective registered investment advisor (RIA) would be wise.