How Can I Ensure My Spouse is Financially Engaged and Prepared?

 

Many families employ the “divide and conquer” approach to finances:  the spouse who either enjoys handling finances or is better at it takes charge.  In prior generations husbands often filled this role but that trend has been changing with more and more women becoming the family’s chief financial officer.  Regardless of who handles the finances a key issue is ensuring that both spouses are aligned and aware of key financial information in case the spouse handling the finances is incapacitated or unexpectedly dies.  In addition, better communication around finances can help reduce arguments or conflict between spouses.

The key to engaging and preparing the “non-finance” spouse is to follow the following process:  focus on the big picture together; create a plan and review it regularly, maintain good records, and introduce them to key advisors.


Focus on the big picture together

Spouses with a shared vision for their financial future are more likely to achieve those goals.  You can develop this vision by having regular discussions about financial priorities and goals.  Examples of topics to cover include saving for retirement, paying down debt, and helping children with education or other needs, where to live and raise a family, when to retire, what a good retirement would involve, and what kind of lifestyle each of you would enjoy before and during retirement.  These discussions present a unique opportunity and danger.  If handled well they can draw a couple closer together.  However, if conducted poorly they can lead to conflict and alienation.

I recommend opening a bottle of wine and asking each other open-ended questions about what each of you would like to see with your finances.  Here are some good questions to try:

  • How do you feel about our finances?

  • What do you think are our most important financial goals to focus on?

  • What are your biggest financial concerns or fears?

A great exercise is to ask one another to imagine sitting on a porch reflecting on your life at 80.  What would you like to be true of your lives at that point?  What will matter from that perspective?  With that perspective ask what needs to happen with your finances to make that vision come true.

The crucial part of these discussions is to listen carefully to what your spouse shares with curiosity and not judgment or negativity.  Ask follow-up questions like “tell me more about that” and “what about that appeals to you?”.  Practice active listening by saying “so, if I heard you correctly you said ____ is important to you, is that right?”.  This helps your spouse feel respected and avoids conflict.  Avoid the temptation to argue, point out why their ideas are unrealistic, too expensive, impossible, or disagree.  Just listen carefully.  Often one spouse will scoff at the goals their spouse shares as too expensive or completely out of reach.  For now, just focus on areas where your goals and dreams overlap and be creative in exploring how you can find more areas of overlap.  For example, maybe you dream of living on the ocean and your spouse wants to retire on a golf course.  A good way to engage could be to explore living near a body of water and a great golf course.  By expanding the dream to a body of water and near a golf course you’ve opened up ways for your goals to develop together.  

The next step is to do research on how much those priorities will cost and what it would take to reach those goals.  By being creative you can often find surprising ways to engage both people’s priorities.  For example, retiring to Hawaii may be out of reach. But many couples love to spend winters in Mexico for a fraction of the cost.   Some couples struggle to understand what it will take to reach their goals.  Indeed, it is difficult to account for multiple factors such as inflation, growth of investment assets, and taxes when looking out many years.  A fee-based wealth planner can help you create a financial plan to achieve those goals.


Create a Plan and Review it Regularly

It is critical for couples to have a plan for each area of their financial lives including investments, taxes, retirement, and estate planning.  After creating a plan set aside time on a monthly or quarterly basis to review your family’s finances.  A great way to accomplish this is to develop a budget and regularly review spending together relative to the budget.  This helps keep spending in check and orient the non-financial spouse to actual income and expense numbers.  I recommend preparing and reviewing a family balance sheet and reviewing it together at least once a year.  By reviewing these two items together you ensure both of you are on the same page regarding your cashflow and tracking your net worth over time.


Keep Good Records

A frequent complaint from spouses who don’t handle family finances is not being able to understand which financial accounts the family has and how to access information on them.  This can be easily remedied by creating a balance sheet (as discussed above) and a separate list of key financial accounts with account information and login directions.  This list of accounts should also include contact information for key advisors on taxes, investments, insurance, and estate planning.  That way if something happens the non-financial spouse knows which accounts are active and how to access them.

To preserve your security, I recommend using a password management application such as LastPass, Dashlane, or Sticky Password to ensure this information stays safe and secure.  These password services have online websites that allow you to view it together and access the information securely on your phone.  Or, print out the list and keep it in a locked cabinet.  


Introduce Them to Key Advisors

Once a year the non-financial spouse should meet with the CPA, investment advisor, insurance advisor, and trust & estate attorney to ensure things are on-track and that they are being coordinated.  Ideally, this meeting would happen with all of these advisors together and coordinating their advice for the family.  These meetings help the non-financial spouse to develop a relationship with these advisors and know who to call if something goes wrong.  

Keeping both spouses engaged in the family finances can be an opportunity to come together about your long-term goals and communicate more frequently about your progress.  Ask for help from a fee-only financial planner if you run into trouble creating a long-term plan for your goals.

 
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