In many households, one spouse or partner tends to be more involved in the money management than the other. But ultimately, regardless of what your relationship (or your parents’ relationship) looks like, it’s very important that both people are in the loop about their finances.
Why Financial Education Matters
The reality of life is that no one lives forever. No one can assume that they will live a long, healthy life and be capable of handling the entire family’s finances for decades to come. Even if both partners are alive, it is unfortunately common to see a decline in memory and cognitive ability as people age. So having a hand in the finances doesn’t just matter for the couple; it matters for anyone who will be caring for them as they age, too.
Couples also need to be prepared for the possibility of divorce or separation down the road. If one person in the relationship has no involvement in the money decisions, then it becomes far more challenging for them if the relationship doesn’t work out. Financial awareness should be a priority for everyone, not just the main money manager in a household.
Build an Estate Plan Together
An estate plan is an excellent tool to help living relatives when someone passes away. It should dictate what happens to your wealth if you pass away or become incapacitated. It should also include things like important points of contact and securely stored account login information.
Even if you have an extremely thorough estate plan, your spouse, partner or children still need to know it exists, and what it means. And if you don’t have an estate plan yet, take some time to get one together. It will cut down on so much stress and uncertainty for your family when you’re gone.
Here are a couple pages from the estate planning document we use with our own clients:
Designate a Financial Manager
Make sure you (or your parents) have a designated, trusted person to take over the finances if you or your spouse can no longer do so. This could be a power of attorney or a successor trustee. Appoint this person as soon as possible, so you can also ensure that they are educated and understand what their role would entail.
Talk to Your Parents About Their Money
For so many people, money is still a taboo topic. This is especially true of older generations. People are more open about their finances now, but in the past, money talk was considered rude or disrespectful.
Even so, if you’re going to need to help your parents with their money, you need to be able to talk to them before it becomes an issue. Express that you’re not there to judge their decisions; you simply want to help them to the best of your ability. In these situations, it can also be helpful to bring in an impartial, third-party professional to assist them in managing finances. Look for a fiduciary, fee-only planner who is willing to listen and educate.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.