Top Mistakes Spouses Make
Managing finances by yourself can be tough. Add on a spouse and kids, and it can make managing finances even more difficult. Surveys show that money difficulties are one of the top reasons for divorces and relationship problems.
Here are big financial mistakes a spouse can make:
* Letting one spouse or partner manage the finances without your involvement. If one person in the relationship is in full control without the other knowing anything, it is a recipe for disaster. If there is an unexpected death, divorce or breakup, the other person will be very vulnerable. If there are no checks and balances, one spouse secretly can run up debt and run into other money issues without the other knowing until it is too late. Take the time to understand what is going on so both of you are in a position to take over the finances in any situation. Visit artofthinkingsmart.com for tips to better manage your finances together.
* Signing financial and legal documents without reading or understanding them. Face it, many of us don’t want to read the fine print and, if a spouse said he or she did it already, we want to trust him or her. We need another set of eyes to ensure nothing is missed and get a second opinion. If you co-sign a loan, a joint tax document or a power of attorney, remember that you are on the hook if something goes wrong. Taking the time to read through it can be a good way to pause and discuss to make sure the right financial decision is made together. Also, if you don’t understand the financial or legal jargon, don’t be afraid to ask questions. I tell all of my clients repeatedly that this is their money and no one can or should make the final decision except them. It is crucial that you have a basic understanding of financial concepts, terms and even why your adviser is making a certain investment recommendation.
* Using a spouse’s financial planner even if you do not feel comfortable. If this is your joint money, the adviser shouldn’t be catering to only one of you. Seventy percent of spouses leave the current adviser after the death of their partner because they never felt they were a part of the financial process. If, at the next joint meeting, the adviser only looks or talks to your spouse, find a new one or find your own.
* Not buying long-term care or life insurance. Seventy percent of 65-year-olds will need some type of long-term care. Women tend to live longer than men, and if you want to leave an inheritance for your beneficiaries and/or want to protect your nest egg, look into getting long-term care insurance. In addition, look at getting the right amount of life insurance to cover funeral expenses, potential estate taxes, loss of income and any debts so your spouse isn’t left with an emotional and financial loss.
It is easy to want to delegate the finances to your spouse, but make sure you are involved every step of the way. It will help you and the family in the long run!