In most marriages, one spouse is the primary handler of the personal finance mechanisms. In my family, it’s me. With my parents, it’s my mother.
That person usually is the one who makes the trips to the bank, makes sure the bills are paid, reads through the bills when they come in, and lots of other little tasks like that.
In our marriage, at least, we talk about virtually every decision we make, but I usually take care of the implementation of those decisions. The same thing is true, more or less, for my parents.
In terms of functionally achieving things, this works really well. However, in terms of actually making decisions, this setup makes it very easy for one person to just simply take control of many personal finance decisions.
At the same time, it’s really easy for the other partner to just allow it to happen and relinquish control and input over a lot of financial decisions. It’s easier and it relieves them of the effort of understanding and figuring out things.
For both partners, this is a mistake for several reasons.
For one, an involved partner can ensure that their voice is a part of the decisions. It’s really easy for the more financially involved partner to shape things to be more in line with that partner’s financial goals and values, whether unconsciously or not. A good marriage is about compromise, and compromise means not having everything exactly how you want it to be, but when you’re in control of the actual implementation of a compromise, it can be very easy to skew things a bit toward your own vision, whether you realize it or not. An involved partner can prevent that from happening.
For another, an involved partner provides a valuable “check” on the decisions and moves of the more active partner. While the active partner might generally be making really good moves, there’s always the chance for a poor decision or a mis-step or an oversight of some kind. A second set of eyeballs and thought processes never hurts when it comes to the financial decisions of your family.
For yet another, a partner uninvolved in the family’s finances will be completely lost if the other partner can’t fulfill those duties. A partner who is unaware of the financial institutions used by the family, where the checkbook is kept, what bills are due each month, where and how the files are stored, and so on is going to be in deep trouble if all of these processes are dumped on that person at once.
Of course, being involved requires additional effort. Often, it means learning things, like what the general difference between an IRA and a 401(k) is and what banks you do business with.
More importantly, it means having regular financial chats with your spouse. This is something I think is a valuable part of a marriage anyway, but the fact that it keeps both members in the loop financially is just another benefit of regular financial discussions.
What should they entail? First and foremost, such discussions should be about goals, particularly in terms of talking about the goals each partner has individually and making sure that all shared goals are still moving forward and still reflect what both partners desire. They’re also useful for reviewing the family’s spending. Are we collectively meeting the family’s budget? Are we in agreement as to any major upcoming purchases?
For Sarah and myself, these discussions are pretty casual and pretty frequent. Scarcely a week goes by without one of these topics coming up naturally as part of our conversation – and the same is largely true of my parents, who I’m most familiar with. Still, I’m quite aware from reader mailbags that this isn’t true of quite a few couples out there, and I consider it an essential part of marriage.
A final piece of the puzzle: both partners should be involved with the creation, maintenance, and storage of a master information document, one that lists all accounts and account information along with contact information for all of those institutions. This is a vital thing to have in the aftermath of a family disaster. There are a lot of formats for this, but a simple word processor document can easily hold all of this information. Just make sure that you have at least one copy stored in a secure off-site place.
Relying on your spouse to just “figure it out” puts you at great financial risk, even without any missteps from your partner. Everyone needs to be involved in their financial future and know what to do in the event of an emergency. Without that knowledge, you’re simply making a potential life crisis far worse than it otherwise could have been while also increasing the chance that your finances aren’t really working for you.