As with many other partnerships, spouses often share responsibilities among themselves to maximize time and efficiency. Perhaps one spouse will take care of grocery shopping and school pickup, while the other will be responsible for paying bills and managing household finances. While this “divide and rule” approach provides a solution to tackling an endless “to-do” list, it can also have significant and long-lasting consequences with only one spouse managing the couple’s finances.
This article discusses three reasons why spouses should talk about their finances regularly, regardless of who is actually paying the bills, and how to incorporate money discussions into marriage.
1. Prepare for the unexpected
Few things in life are safe, a fact that the COVID-19 pandemic makes abundantly clear. Sudden unemployment, illness, injury, or the death of a spouse can turn life as you know it upside down. The sudden loss of income can be an enormous financial burden for most families as they depend on their wages to meet their financial obligations.
In a situation where a spouse is incapacitated or deceased, the wealthy spouse may not be able to access bank accounts and the funds in them. While a lack of access can mean that the wealthy spouse does not know where the money is being kept, it is far more often the result of the accounts being kept in the name of only one spouse. Banks are interested in whose name is on the account or whether there are documents that give someone access if the account holder dies or becomes incapacitated. In this scenario, the wealthy spouse may need additional documentation or a court order to gain access to the account. This can be costly in both time and money.
Spouses who communicate about finances and ensure that both people are aware of the accounts and have access to funds are able to minimize and even eliminate some of the harsh consequences that arise when life inevitably throws a curve ball.
2. Reduce conflicts
Whether you’re planning for retirement, saving to buy a home, or giving away money to pay for your child’s tuition, communicating with your spouse about finances will help both of you. Disagreements about finances remain a leading cause of divorce. Making agreements and setting clearly defined expectations on issues such as spending behavior and debt management can help meet your financial goals and end potential marital disputes over money.
Unfortunately, not all marriages end happily ever after. Many end up in divorce. California is a jointly owned state, which means that in general, each spouse is entitled to half of the property acquired during the marriage, regardless of who acquired it. The property and debts acquired during the marriage are known as the common good.
It is difficult for a spouse who takes financial precedence during the marriage to determine what the joint estate consists of and what each spouse is entitled to in the event of a divorce. Since this spouse has no point of reference, the knowledgeable spouse may be less willing to disclose the location and values of the assets (or the extent of any liabilities). An attorney will help you in these situations, but if you have a clear picture of the marital finances from the start, your attorney will be in the best position to advocate an equitable and equitable division of property.
During a contentious divorce, suspicion arises and communication becomes strained. Therefore, it is important to have regular financial discussions during the marriage.
Talking about money can be awkward, especially at the beginning. Try the following:
Redesign the way you look at the subject
Granted, checking bank statements and exchanging budget ideas isn’t romantic. Clear communication, however, is the foundation of any good team, and marriage requires teamwork. In addition, a plan for dealing with finances when life takes an unexpected turn is no different from planning for any other emergency, such as a fire or an earthquake. The purpose is to protect the safety and wellbeing of the other. When you treat money discussions as a way to take care of the person you love, it becomes clear why it should be a priority.
Make sure that both spouses have access to important financial information
Information on all financial accounts, including online banking passwords, should be shared and updated regularly. Keeping a spreadsheet that both spouses can access is a great way to accomplish this goal. Also, make sure that the bank has all the necessary records on file for all accounts that are not jointly owned to allow access to the other spouse in the event of death or incapacity for work.
Taking the time to talk about finances will allow the spouses to share important information with each other and make adjustments as needed or changing circumstances. Another benefit of planning financial meetings is that people will feel comfortable getting involved in activities that they have previously done. The more regular you have these conversations, the easier it will be.
The bottom line is that money is important in a marriage. Talking about finances doesn’t mean that spouses can’t divide up tasks, it means turning an often dreaded and avoided topic of conversation into another conversation to say “I love you”.