Who makes your family’s financial decisions?/Gail Liberman & Alan Lavine
We see it way too often. One spouse handles the finances. The other is in the dark.
Sound familiar?
In our household, the female coauthor of this column pays bills. The male handles much of the investing.
However, we admit. We often discuss both spousal areas of financial responsibility with each other. The female coauthor, for example, saved the day a couple of years ago, with the suggestion to keep more of the household assets in cash. Good thing that we both communicated on this issue!
Today, we hold regular discussions about what to do with our assets in the future.
Unfortunately, we don’t always agree.
For example, the jury is still out on whether we should stop getting financial statements from our bank, brokerage firm and investment companies via snail mail.
Although it’s a great idea to access and pay bills online, we’re reluctant to do business online due to all the bad news about computer hackers getting into personal accounts. The female coauthor is not totally convinced our financial institutions would reimburse us for any losses.
Al: Let’s get rid of all the paperwork!
Gail: I always want a hard copy of all our information in case there ever is a problem!
Guess who’s winning this one—at least until financial institutions and enforcement agencies substantially improve online security?
The greatest mistake couples make is failing to discuss these issues and others that relate to your finances.
"If a crisis arises in your family--such as the loss of a job, divorce, hospitalization, disability, or death,” says Robert DiQuollo, principal with Brinton Eaton Wealth Advisors in Madison, N.J., “you'll be terribly handicapped if you know little or nothing about your financial situation."
Perhaps both of you can start getting involved in the finances by taking this quiz we’ve adapted and expanded, based on DiQuollo’s checklist:
• What are you spending each month? Don’t know? In that case, total your monthly expenses for mortgage or rent, car payments, food, utilities, insurance, recreation, charity, memberships, education and so on. Determine which expenses are fixed and which are changeable. Evaluate what discretionary costs may be cut. "Good times can hide excessive spending,” DiQuollo warns. “But when one partner is laid off and the bills start piling up, the other may be shocked…” Best to head off this situation at the pass.
• Where are your key financial documents? Do both of you know? Discuss now where to find all insurance policies, bank and investment statements, wills, credit-card records, passwords for online banking and investment access-plus the key to the safe-deposit box. If you work with a local financial firm with whom you feel comfortable treating as a trustee or adviser, the firm may be able to store copies of your key documents as a safety net.
• How well-diversified are your investments? First, list major assets, including all retirement plan investments. Determine which are liquid and which you might not need for some time. Do you have enough cash to meet your immediate needs? Are your investments too concentrated in high-risk investments, like stocks? Or, might they be too safe in low-return investments, like bank CDs? Decide together how to better diversify the family assets.
• What insurance coverage do you have? Many have life and disability insurance through their employers. That could become a problem if one or both spouses are laid off. You might wish to consider supplementing that, or at least, discuss what you will do if one of you loses a job.
• How much do you owe and to whom? Brainstorm ways to whittle that amount down.
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Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at www.moneycouple.com.
