When you say, “I do” that doesn’t mean you should turn over the reins to your financial identity. We know that when you get married you are sharing your life, home, future and yes, your finances with your spouse. Sharing is ideal; completely relinquishing all financial control could be harmful if you and your spouse become one of the 50% of all couples, who as statistics show, in America eventually divorce.
A woman who has relinquished her financial identity and all financial control to her spouse is at a disadvantage if a divorce is looming. You won’t know how much money is in the bank. You may not know where the financial papers are stored or how to access online accounts. If you haven’t been involved in the paying of bills you won’t know what the debt versus income is. Additionally, if you give up your own financial identity you will have a hard time establishing credit once you’re divorced because you will have no credit history.
A marriage can end through divorce or death and while no one likes to think about it, if you lose your partner and if that partner managed the household finances, the stress you’re facing will be multiplied. In addition to dealing with the loss you will have to find a way to piece together information about your finances, household expenses, income, the details of where your investments, savings and debt accounts are held. This information is crucial in a divorce or if your spouse has passed.
Share the financial chores
We urge women to stay involved and invested in the household finances. Know where the bank accounts are and how to access the online accounts. Understand the income and expenses and the magnitude of the household debt. Set aside time each month to pay the bills together and share in the financial conversations.
While you don’t want to get bogged down in credit card debt, it is not a bad idea for you to have your own credit card that you use occasionally and make regular payments on. Establishing a credit history will be beneficial if you find yourself suddenly single.
Talk about finances before marriage
If you and your new husband lived together before you got married, hopefully you had conversations about joint finances and how household bills would be tackled. Talk with your significant other before marriage about how you will handle the family finances and how to share the responsibilities. Will you have a joint account and separate accounts as well? If you’re doing that, is there a reason for it? If you have separate accounts will you have access to one another’s accounts – again in the event of a death or divorce this could be crucial.
Don’t let yourself get into a situation where one or the other of you is the family’s chief financial officer. Make an arrangement that suits your individual money styles with an eye toward openness and full fiscal disclosure. It’s very easy to say, “Oh he/she’s better with money so he/she handles it.” Don’t fall into that mindset – stay involved and aware.
Communication is key
You don’t have to sit down and talk family finances every day, but you should have a time at least monthly when the household bills are being paid that you discuss what’s coming in and what’s being paid out. Many couples find it beneficial to have what they call a discretionary fund in which they set an amount -- $100, for example – that each person can spend before they have to have a discussion on that spending.
No one wants to give up all financial autonomy, but if you’re sharing a life it only makes sense that you will be sharing your family financial responsibilities.
If you’re facing a divorce, give our office a call. Working with a CDFA helps you to remain more in control of the process, helps save money on the divorce process, and keeps your private life private.