Our featured article of the month, Managing Money As A Couple, discusses the importance of making financial decisions as a couple in the household. When I meet with clients I emphasize the importance of meeting with the couple together. I fully understand that typically one person is more interested or atuned to their financial situation than the other. However, it is important for the less interested person to at least check-in on their shared financial situation periodically. Otherwise, in case of emergency or death, the remaining person is at least somewhat aware of the big picture.
Over my career I have fortunately been able to help by completing the picture by being the main point of contact for my clients’ finances. The piece of mind and relief to them was supportive during difficult situations.
How much involvement is necessary? Does that mean you need to track the asset allocation on every account each month? No, but a higher level of understanding would be prudent. For example, know who your primary custodian is, where to access the statements as most are now e-delivery, and have your advisor’s contact information handy. Additionally, if you have grown children, start to communicate with them about your trusted advisor and how to contact them.
When you marry or simply share a household with someone, your life changes—and your approach to managing your money may change as well. The good news is it’s usually not so difficult.
At some point, you will have to ask yourselves some money questions—questions that pertain not only to your shared finances but also to your individual finances. Waiting too long to ask (or answer) those questions might have some consequences.
First off, how do you propose setting priorities? One of your first priorities should be simply setting aside money that may help you build an emergency fund. But there are other questions to ask. Should you open joint accounts? How should you title assets that are owned by both of you?
How much will you spend & save? Budgeting can help you arrive at your answer. A simple budget, an elaborate budget, or any attempt at a budget can prove more informative than you realize. A thorough, line-item budget may seem a little over the top, but what you learn from it may be truly eye-opening.
How often will you check up on your financial progress? When finances affect two people rather than one, statements can become more important. Checking in on these details once a month (or at least once a quarter) may keep you both informed, so that neither one of you have misconceptions about household finances or assets. Arguments can be avoided when money misunderstandings are resolved through check ups.
What degree of independence do you want to maintain? Do you want to keep some money separate? Some spouses need individual financial “space” of their own. There is nothing wrong with this approach.
Can you be businesslike about your finances? Spouses who are inattentive or nonchalant about financial matters may encounter more financial trouble than they anticipate. So watch where your money goes, and think about ways to pay yourself first. Set shared short-term, medium-term, and long-term objectives.
Communication is key to all this. Watching your progress together may well have benefits beyond the financial, so a regular conversation should be a goal.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.