Union Bank's Resource Library—Finances
Many couples agree that one spouse should take care of the family finances-either
because he or she enjoys it or because the other spouse feels ill-equipped
to handle the task. For the most part, this arrangement can work out
very well. But at some point, whether it's due to divorce or death,
one of you may be handling the finances alone. So it makes sense for
both of you to be familiar with essential financial matters.
Begin With The Day-To-Day Issues
It's important that you know where assets such as securities, real estate
and insurance policies, as well as current bills, are kept. Even if
you think you already know, sit down with your spouse and discuss the
bill-payment routine. Here are some tips to make sharing the information
Then Consider the Long-Term Plan
- Keep clear, written records. If one of you becomes
unable to handle the finances, for whatever reason, clear records
will help the other decide what needs to be done with a minimum
of fuss. By setting up folders for each subject and including written
instructions with each, such as whether you have to pay hospital
bills up front or your medical insurance will pay right away, you
can both be more calm in an emergency.
- Consolidate your accounts. If you and your spouse have
accounts at several different institutions, taking over the finances
may be much harder. By consolidating your accounts at one institution,
you not only keep your finances simple, but you may be able to take
advantage of preferred customer promotions.
- Establish a relationship with a trusted adviser. In
the event that you or your spouse pass away, it may help to have
a trusted financial adviser. This can be anyone, from a close friend
of the family to a son, daughter or bank officer.
Once you both understand the daily upkeep of finances, discuss your long-term
goals. You should both be aware of the following issues:
Prepare Yourself For the Future
- Jointly-filed income taxes. Both of you should carefully
check over the income tax forms for mistakes, since you will both
have to pay any tax penalties.
- Schedule a yearly financial meeting. Figure out your
net worth, where you stand in relation to your goals and whether
you want to make changes in who handles certain financial responsibilities.
- Credit card debt. If you jointly own a credit card
or live in a community property state, you will be held responsible
for your spouse's debt. It is important that both of you know how
much debt you have accumulated and how you plan to pay it back.
This also helps to keep you on budget.
- Retirement savings. Make sure you both know how much
you have saved toward retirement and how much you will need (remember
that, on average, women live about seven years longer than men).
It is also important that you know what insurance policies each
of you hold, how much they are worth, and who the designated beneficiaries
are. In addition, you need to know where your latest wills are kept
(if you don't have one, get one now!) and any living wills and powers
of attorney that you want enacted.
Although learning the basics of your family finances can seem intimidating;
it may be very simple to grasp. By reviewing your financial situation
with your spouse and reading a few books on money management, such as
Personal Finance for Dummies by Eric Tyson, you and your spouse can feel
more confident directing your finances together.