Your Money ; Financially Speaking
Watch out if your spouse says, ‘Honey, I’ll take care of everything’
No Excuse for Ignorance By Jane Bryant Quinn
I hate to say it of my gender, but women of- ten don’t pay enough attention to the family money. They’re usually enabled by guys who
like to manage things themselves. Both sides need
to wake up. Family money is everybody’s business.
I keep hearing stories about new widows, from
traditional marriages, who gasp when they realize
they’ll now have to make financial decisions. And
stories about husbands who lovingly say, “Don’t
worry, I’ll take care of it,” which doesn’t prepare
their wives for a life alone.
Even younger wives might not know about their
husband’s investments or where the retirement
income is likely to come from.
All too often, couples structure their household
chores along gender lines—even if they both hold
jobs. She does the cooking, and the laundry, handles the kids and maybe pays the bills. He decides
on the insurance and investments, maintains the
car and takes the garbage out. That makes no
sense for either of them.
The issue comes to mind because
of an email AARP forwarded to me.
A woman misunderstood her coverage under her husband’s retiree
health insurance (he’s in a nursing
home) and mistakenly canceled the
drug policy on the eve of her own
cancer surgery. The company refused to reinstate her. Her children
filed an appeal and, meanwhile, got
her into Medicare Part D.
She recovered from the error.
The company eventually reinstated her, so she is now able to
choose between her old plan and
Part D. Sometimes, however, mistakes can permanently change
That’s why both partners need
to have a broad understanding of
the finances, including husbands
whose wives are the family wizards. The best way of learning is by
doing. You might take turns paying
bills. You each might handle part of
the investments. By answering the
following five questions together,
you’ll both be prepared.
1. What’s your annual income and what does
it cost to live? The first question on the mind
of a widow (or widower) who hasn’t paid much
attention to money is, “Do I have enough?” It’s
terrifying not to know.
To forestall this shock, you and your spouse
should create a budget file. Show all the sources of
income available after the first spouse dies and the
current annual amounts. Subtract your expenses,
including taxes. That gives your survivor a road
map, showing roughly how she (or he) should be
able to get by.
To get your mind around how well you’re jointly managing money today, consider
signing up for one of the free money-management services online. You enter all your financial accounts—bank,
investment, loan and credit card. The
service tracks your income and outgo,
and what your investments are worth.
2. What to do with lump sums? If the survivor
will collect life insurance or an inheritance, discuss
how to handle it. Attach a note to the policy or the
will to help you remember the conversation.
3. How to handle existing investments? Some
widows start reading financial books and discover the little secret that simple investing isn’t
hard. They hold some of the money in the bank or
a money fund, to help pay expenses over the next
three to five years, and invest the rest in low-cost
mutual funds that own stocks and bonds. Others,
however, may never feel confident managing money. Husbands do them a favor by having a tested
financial adviser already in place.
4. What about drug coverage,
long-term care and life insurance on the surviving spouse?
Discuss what to keep, what to
update (such as correct beneficiaries) and what to cancel (for
example, the survivor might not
need life insurance). Attach a
“reminder” note to each policy.
5. Where are all the financial records?
Gather into labeled folders: bank records (and the key to the safe deposit
box); passwords to online accounts;
Social Security number; retirement
plans and other investments; insurance
policies; wills, trusts, health care proxy
and power of attorney; loans; deeds;
buy-sell agreements with a business
partner; employee benefits; records of
any money you’re owed; personal papers such as a marriage certificate; recent tax returns; bankruptcy records,
to prevent a widow from being dunned
for a debt that the court discharged; and
the names and contacts of your advisers—broker, planner, insurance agent.
After a period of sheer terror, most
survivors get their minds around their
money. Your plan, as a couple, should
be to skip the terror phase and move
directly to peace. ;
Do I have
live on? It’s
not to know.
Jane Bryant Quinn is a personal finance expert and author of Making the
Most of Your Money NOW.