Surviving Spouse Finances: Take a Larger Role with Your Money

Death, disability and divorce—the “3 Ds”—can all be emotionally devastating. The financial aspects, however, can have far-reaching effects on individuals and families that could be tempered or improved with proper planning.

Recent celebrity deaths, such as those of Chadwick Boseman (age 43) and Luke Perry (age 52) raised our awareness of the importance of being prepared for the worst and taking an active role in our finances even at a young age. Many people, young and old, shy away from financial and legal matters because of lack of time or interest, fear or even embarrassment.

Over 40% of marriages in America end in divorce. In many marriages, one partner is more active in the family finances. While it may be prudent to divide and conquer based on skill sets and time available, completely delegating financial management is risky to the uninvolved party.

One in four Americans has some kind of disability. Promoting healthy living, along with planning for the financial impact of disability, should be part of every family’s financial plan.

Enough of the scary news. Taking an active role in your finances now is prudent regardless of the “3 Ds.”

Play an Active Role

Here is some guidance on how to get more involved with your finances, even if you think you don’t have the time, or you find it boring or challenging.

• Write down your expenses – even just once a year. You’ll get a better idea of where your money is going, and the act of recording expenses alone may prompt you to spend less and save more.
• Create an easy way to save money – Set up salary deductions for a 401(k) or IRA, and establish a monthly deposit into a bank account that serves as an emergency fund. You’ll be saving more money before you know it!
• Write down what you owe and what you own – and track it over time. Whether you use a snazzy app or an old-fashioned notebook or spreadsheet, the mere process of writing down assets and liabilities will prompt you to be more aware.
• Meet with your corporate human resources professional and have him or her walk you through all the employee benefits associated with your (or your partner’s) job. Pretend it’s your first day on the job. Pay particular attention to retirement plans, life and disability insurance, and health insurance options. If there are enrollment periods that you have to wait for, mark your calendar to make sure you don’t miss any deadlines. Often such group benefits can be less expensive than individually purchased options.
• Consult an attorney who specializes in estate planning, to see if your existing legal documents are appropriate. If you’ve never executed any documents, ask about the importance of a will, trust, health care directives and a financial power of attorney. Spending money on these documents today could save yourself and your loved ones considerable time, money and heartache down the road.
• Meet with the accountant who prepares your taxes. Whether you’re the alpha financial person in your family, or the one who signs without looking, you both could benefit from spending an hour together with your tax preparer to understand what all those numbers mean, and how you could possibly save on your income taxes.

Figuring out how all these pieces of your financial puzzle fit together is essential. A CFP® professional can provide customized guidance related to your personal situation, and explain all these concepts in plain language. Together, you really can plan for and manage your life better, if and when a challenging life event occurs.