Know your finances

(Don’t just leave them to someone else)

Created date

July 27th, 2010

If you don t have a head for numbers or if you find the stock market as interesting as watching paint dry, leaving the finances to your spouse may seem like the easy way out. But burying your head in the sand when it comes to money management can set you up for disaster down the line.

Get on the same page

If you ve made a habit of turning over paychecks to your spouse and not asking any questions, you could be in for a rude awakening. Daniel Ruttenberg, a Washington D.C.-area attorney whose specialties include estate planning and administration, says the spouse who manages the household finances may be more comfortable carrying debt or investing in high-risk assets, for example, than the non-controlling spouse. [caption id="attachment_13454" align="alignright" width="280" caption="Even if you re not handling the budget, you should know the financial basics. (File photo)"][/caption] Having a conversation about financial management may be a very eye-opening experience for the other spouse, who may find that the philosophy of the spouse who has been doing it is completely contrary to theirs, Ruttenberg says. Worse yet, if the spouse who controls the money suddenly becomes ill or passes away, the other could endure a lot of unnecessary stress. In the past, the surviving spouse could simply wait for account statements to arrive in the mail. But with more people managing accounts online, Ruttenberg says those statements may never arrive and the widow or widower might not even know the websites or passwords to access the information. I had one client who said after her husband passed away, I don t know if I can even continue to buy the nicer tomatoes, Ruttenberg. It turned out she had $10 million.

Enroll in Finance 101

Ruttenberg s business partner, Jason Smolen, who also specializes in estates and trusts, says the good news is you don t have to become an expert in order to be a responsible partner in managing your family s finances. Just because your wife is a math whiz or your husband is obsessed with the Dow Jones does not mean you have to be as well. You don t have to take over the job of managing finances, you just have to understand it, Smolen says. Instead of becoming overwhelmed, sit down with your spouse and review the key components of your finances. At a minimum, you should know where your assets are invested, where important documents are stored, and how to access your bank accounts and pay your bills. Smolen says the spouse who manages a couple s finances should also introduce his or her husband or wife to the family s accountant, lawyer, financial planner, and any other important advisors. Having trusted professionals on hand to help can go a long way when a family is dealing with a sudden illness or death. If there has been a professional involved, everybody should be introduced because one spouse could suddenly be faced with a very short window to start facing issues, Smolen says. Lee Hausner, a California-based psychologist, business consultant, and family wealth advisor, says, It s imperative that both partners in a relationship understand Finance 101. She tells her clients to create a book of knowledge a notebook or computer file that contains all financial information. Hausner says the file should include everything from bank account and insurance policy information to advisors names and phone numbers to important websites and passwords.