Marriage and finances: it’s often a tricky relationship. But, please, no matter what–don’t be in the dark about your family’s financial situation!
It’s Wednesday, the day when we always talk marriage! And today I want to tackle marriage and finances and all the problems that ensue when only one spouse knows what’s going on.
If tonight tragedy were to strike, and your husband were to be in a car accident, would you know where to find your insurance information? If a fire struck, would you know where your house content insurance policy is? Do you even know if you have one?
Or, when you go and take money out of the ATM, do you know how much is available? Are you short on cash, or is it okay to treat the kids to an ice cream while you’re out?
Too many women don’t know the answers to those questions.Too many women don't know where the investments are, the insurance forms, or the accounts. Click To Tweet
My friend Holly tells her story:
My husband and I went through bankruptcy in March 2009, due to so many factors, like job loss, housing market crash, the economy and our own foolish choices. During that time, my husband took over all things financial to shield and cover me from the stress of it all. It was a good thing for a time. When we began to end our three years of bankruptcy, I (a business major) was ready to take the bills over again. For a whole year I asked him to hand them back over, and even had my prayer group praying, but he delayed.
Little did I know that he was doing his best, but was still very behind. Truly, he was shielding his bride still from the strain of what we owed and the discouragement of not having enough to pay it all. One day, a very timely day, we received notice of foreclosure unless we paid by a certain time. I was completely surprised! My husband said he was so sorry (and truly, he was). My choice then was to get back to back with him, as a team. We now are paying back extra on our mortgage with a plan that is hard-pressed, but do-able. AND we are doing the bills together every week. There’s a reason why two are better than one. If one falls down, the other can help him (or her) get back up again.
(you can read more of her story here).
A few weeks ago I posted a Reader Question which asked: Help! My Husband Doesn’t seem to care about the finances. Many couples have a financial mismatch. One person wants to know where the money is going, and the other prefers to have his or her head in the sand, believing that “everything will work out fine in the end”.
That is extremely irresponsible. And if your husband tells you that he has everything under control, but you have no idea how to locate anything financial, and you have no idea about your net worth, that is extremely irresponsible, too.
You are a team.If you're married, you're a team. That means you should BOTH know about the family's finances. Click To Tweet
It’s fine if one person does the finances and pays the bills and figures out how much money you have. But the other person still needs to know what is going on. Saying, “well, he’s the head of the family, and he says he has it all under control, so I need to trust him” is just wrong. Let’s look at why:
1. Scenario A: He’s Being Perfectly Responsible with the Money, but Something Happens to Him
He’s paying the bills. He’s socking money away for retirement. He has good investments. All the insurance premiums are paid. And one day something happens to him.
Those life insurance policies don’t pay automatically. You have to claim them. You don’t have access to bank accounts you don’t know about. You can’t take money out of a bank account you’re not named on. You can’t pay off credit cards you don’t know about. If he’s responsible, but you don’t know where anything is or what you have, you could still end up in a huge mess. And if you’re grieving, do you really want to worry about all of that financial stuff, too? I talked to the owner of Goldsmith Insurance and he said, “I can tell when couples are really working together because they come in to get a policy together and each spouse understands exactly what is going on with the policy.”
I’ve even known couples where she didn’t have a bank card or a credit card; he gave her a cash “allowance” every week, and it worked fine. But then one day he ends up in the hospital and she has no access to any of their money. This isn’t responsible. It isn’t safe. And it’s treating her like a child, not like a spouse. Both spouses must have access to everything.
2. Scenario B: He’s Isn’t Being Responsible, But He Isn’t Cluing You In
Maybe he doesn’t understand how debt works. Maybe he’s embarrassed that his income isn’t covering your expenses. Maybe he just finds it stressful, and he’d prefer not to think about. So he’s letting some bills go unpaid.
And then one day he comes to you sheepishly and says he needs you to come down to the bank and refinance your mortgage together. They need your signature, and he’s gone so far into debt that he needs to take out a second mortgage. Or something happens to your house and only then do you find out you didn’t have contents insurance.
Of course other scenarios also play out: maybe you’re doing the finances and he doesn’t want to hear about it. Maybe he’s spending too much but he doesn’t want to stop. These things can drastically impact your marital harmony and your future.
So let me list a strategy to make dealing with finances as a team easier.
1. Whoever does the finances also prepares a “status update”
Whoever pays the bills emails or prints out a status update twice a month of how much is in the bank, how much you owe, and how much you have. It doesn’t have to be elaborate–just a snapshot so that you both know how tight money is–or isn’t.
As a commenter pointed out in that finances reader question, if the only time you ever talk about money is when there isn’t any and when you’re stressed, then it becomes difficult to talk about. It’s seen as an attack on his ability to provide. But if you consistently update each other every two weeks, then it’s not an attack. It’s just a “keeping you in the loop” so we can plan together and act as a team. That’s good!
2. Take Care of Must Haves first
Some things are negotiables. You don’t need satellite TV. You don’t need your kids in soccer. You don’t need to eat out, to hire a maid, or to buy new clothes.
But there are some things that are NOT negotiable. Every family needs them so that if something happens you’re prepared. Here are what I consider non-negotiables:
1. House Contents Insurance and House Insurance
We often think of house insurance, but do you have the contents insured? And make sure your home insurance/business insurance policy offers liability insurance, too. It is too risky not to have this kind of coverage.
2. Disability Insurance and Life Insurance
We all know life insurance is important, especially if you have one main breadwinner and one person who stays at home. If someone dies, you want to be able to continue to care for your family, not suddenly have to find a well-paying job at the same time as you’re grieving.
But did you know that disability insurance is even more important? It’s far more likely that a bread winner will be disabled for a time than actually die. And disabilities are also expensive. Please, don’t scrimp on this!
3. Health Insurance
Depending on what country you’re in, you need this. Make room in your budget, even if it’s tight.
If you have children, and you don’t have a will, and something happens to you, do you really want your friends and family members going to court over who gets the kids? What if you were hoping that your sister would raise them, but your husband’s mother really wants them? You need a will, or else the state will decide who raises your kids, not you.
5. Emergency Fund
Every family needs an emergency fund of about 3 months’ income to tide you over if something happens–job loss, injury, massive unexpected expense (need a new roof, new furnace, new car).
3. Budget Together
Once you have the must-haves taken care of, decide together where the rest of your money will go, and how you will pay off debt. If he’s the one doing the finances, that doesn’t let you off the hook in terms of budgeting. You need to do your share, too, and that includes sticking to what you’ve agreed is the right course of action. But it also means that you must have input into what that budget is. I have known so many women, like Holly, who thought their financial situation was fine, so they bought things they never would have purchased had they known how far into debt they are. So both of you go over this and decide together where your money will go and what your priorities will be.
It gets me so frustrated when I hear women talk about finances as if it’s a submission issue; I just need to get out of the way and let him pay the bills because he’s the man, and if he fails to pay the electricity bill for a few months and the lights get turned off, I still won’t say anything because I need to submit.Submission does NOT mean the man does the finances. You're a team! Know your money situation. Click To Tweet
No, ladies, you’re a team! And maybe you’re the one who is more gifted at finances than he is! What you need to do is to have a conversation about this and talk about how you can be a team. Who is best equipped to handle the finances? Who wants to handle them? And then what procedures can we put in place to make sure that the spouse who ISN’T doing the finances still knows where the insurance statements are, where the wills are, where the bank statements are, and what we owe.
This is a fundamental part of marriage.
Sometimes we think of marriage too much in hierarchical terms and not enough in terms of a team. And finances are where you must be a team, or else you too easily could be working at cross-purposes and putting each other at risk.
If you’re really struggling with debt, or you just want to get a handle on how to budget and how to save, my favourite resources are:
Dave Ramsey’s Total Money Makeover (only $13.49, and such a great resource)
Dave Ramsey’s Starter Kit: Includes Total Money Makeover, some DVDs, and starter Envelope system
But please, ladies, whatever you do, be a team. Don’t stay in the dark. Yes, finances can be scary. Yes, insurance can be complicated. But this is something you can’t afford to ignore. Talk about it, and make a plan to deal with it. Two are always better than one.
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