“A lack of engagement can prove costly, but there are ways to bring the less-knowledgeable partner to speed.”
There are several reasons for one spouse not to be involved with the household finances: too busy, intimidated by numbers, or simply not interested. However, the cost of not knowing where the money is, how investments are structured, the state of retirement savings, or the daily details of how bills get paid, can be quite high, when one spouse is unexpectedly put in charge.
This recent article from The Wall Street Journal, “When One Spouses Handles Finances,” reminds readers that one spouse may not be involved because they are the main breadwinner working 12-hour days. However, for one family, the unexpected early death of the spouse, who managed the family’s finances led to a high-powered executive having to learn all about finances at the worst possible time in her life.
Spouses are urged to take a more active role in the family’s investments and to be certain they are comfortable with the family’s advisors. If they are both are not comfortable with the professionals handling their money and legal matters, it may be time for a change. If the change is made after a spouse dies, it should be seen as a move towards independence, and not a betrayal of the spouse’s legacy.
Studies conducted by financial service companies have found that despite gains in education and, to some extent, compensation, women still let their spouses handle financial decisions. Even millennial women, those born between 1980—1996 (roughly sixty percent), leave those investment decisions to their husbands.
Women are controlling more wealth and are more likely to divorce or outlive their husbands than at any other time in history, so taking the financial reins is very important.
Financial advisors are trying to bridge the gap. Some encourage spouses to create lesson plans, exploring one topic per session and then go to dinner afterwards (without the kids) to discuss wills, insurance and investment basics or whatever the topic of the week was. Others hold quarterly meetings.
It can be frustrating for one spouse to deal with a non-involved spouse, who either doesn’t want to learn or has trouble grasping some of the concepts. In that case, getting a non-related person involved might be a good tactic. Set up meetings with your estate planning attorney, financial advisor, and CPA that are geared to reviewing your family’s assets and estate plan, with the focus on bringing the non-involved spouse up to speed.
Make it personal and rewarding. It’s far more fun for someone to open their own “50th Wedding Account” and learn by investing, than to get drilled on a textbook lesson. If one spouse dreams of travel, turn working together on budgets and investments with specific trips in mind into a motivating force.
Above all, be patient. Give the spouse time to learn, get engaged and not be defensive about their lack of knowledge. A willing partner, after all, will always learn more.
Reference: The Wall Street Journal (Oct. 22, 2018) “When One Spouses Handles Finances”
Suggested Key Terms: Investments, Retirement Planning, Budgets