Couples often structure their household finances where one partner takes care of all the bill-paying and investments. But all too often, the non-financial partner is left widowed or otherwise alone and has no understanding or knowledge of household expenses, investments, or what it takes to live on month-to-month. That is why both partners need to have a broad understanding of the income and expenses of the family household.
According to Jane Bryant Quinn, personal financial expert and monthly contributor to the online AARP Bulliten, the best way to keep up with the finances is to share the responsibility; take turns paying the bills. Perhaps each of you can handle some of the investing. In any event, Quinn suggests answering the following five questions together to be prepared:
- What is your annual income and what does it cost to live? Create a budget together. Identify all your sources of current income and of available income should one of you pass away. Subtract your expenses, and you should have a good idea of what it will take for the surviving partner to get by.
- How should you handle investments? It’s probably best to establish a trusted financial adviser in whom each partner feels confident .
- What will you do with a lump sum of income? It is likely that a surviving partner will collect life insurance or some sort of inheritance, so you should discuss how to handle it (i.e., what to pay off, what to invest) and attach a note to the policy to recall your joint decision.
- Do you need to have long-term care insurance? Find out from your financial adviser
- Where are the financial records? As a couple, you should identify all of your household accounts and keep clear, accessible records. You should also have a list of online passwords to all financial accounts, a record of both Social Security numbers, and a file of personal papers including legal documents.
By planning ahead, you will be doing yourselves a favor and providing future stability and peace of mind.