As I have stated previously, if you are married, you need to be working with your spouse on money matters in order to have success.
You should no longer be discussing “yours” or “mine” but “our” money, “our” finances.
When you work together with your spouse on your finances, you are demonstrating:
- Respect for your Spouse. You are saying that you respect your spouse’s capability and intellect to handle money.
- Trust in your Spouse. You are saying that you know they have integrity and honesty and can be trusted with money matters.
- Humility before your Spouse. You are honestly acknowledging you don’t know everything and that you can use some help in dealing with your finances.
When you deal with your spouse with respect, trust, and humility in the management of your finances, you will reach a new level of intimacy in your relationship.
What’s the practical side of working together on your finances? In order to handle your finances well, you need a financial management system.
And the best way to demonstrate respect, trust, and humility with our spouses is to have a system where both you have equal access to the information and equal ability to handle and act on the information.
Now, it is quite possible that one of the spouses routinely handles most of the load of managing the finances (e.g., preparing the budget, paying the bills, etc.). But what happens if that spouse is not available for an extended period of time?
This situation could be due to an illness, being away from the home for work or family matters, or in the worst possible scenario, that spouse dies. What happens then? Can the other spouse pick-up the load?
Again, both spouses need access to all the financial information and the ability to act on that information.
Here are the key elements of your financial management system:
1. How Do We Pay the Monthly Bills?
Your monthly budget should tell you where the money is going before the month begins. However, both you and your spouse need to also know the following with respect to your monthly expenses:
- What are our monthly bills?
- When are the payments due for each bill and when are the payments made for each bill?
- What is the name and contact information for the payees for each bill?
- How are the payments made (e.g., paid through your on-line banking system, regular check via mail, etc.)
- How are we tracking monthly expenses?
It does not matter if your bill payment system is the old fashioned checkbook register, an Excel spreadsheet, a software program like Quicken, or an on-line program like Mint.com or YNAB.
It does not matter if it is a combination of some of these tools; the point is that both spouses need the access and the ability to use the system to pay your monthly bills.
2. What are Our Assets and Liabilities?
Besides being able to handle the monthly bills, both spouses need the ability to access the information on all your assets (what you own) and liabilities (what you owe).
You both need to be able to ascertain what your current financial position is at all times.
You need the documentation on each of these asset accounts listed below. If there is paper documentation make sure you both know where it is stored.
You both should be able to access all the details and statements on the following:
- Checking and Savings Accounts
- Investment Accounts
- Retirement Accounts
- Medical Savings Accounts (e.g., Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs))
- Home Appraisals
In today’s world, much of this information is kept on-line, so make sure you both know where to go get the information and how to access it (provider’s web sites, userids, passwords, account numbers, etc.).
It is critical that you also know what your financial responsibilities are at all times.
You need to know what the current balances are as well as the record of payments made.
- Credit Cards
- Car Loans
- Student Loans
- Personal Loans
- Medical Bills
- Mortgage Statements
Again, much of the information today is kept on-line so you both need the access information. But if you also have a physical filing system, make sure you both know where it is kept.
3. Where are our Key Household/Estate Documents?
Finally, both spouses should be able to access these key household/estate documents at all times. Some examples of these documents are:
- Deed/Title information on your personal home and any other real estate you own own.
- Insurance Policies (Life/Auto/Health/Home/ID Theft/Long Term Disability/Long Term Care)
- Tax Returns
- Credit Reports
Regardless of how you implement it, your household needs a financial management system. And if you are married, both spouses should have the ability to access and act on that management system.
Take sometime today to make sure you love each other well by taking the step to create or revise your system.
What is your financial management system? How are you and your spouse sharing the load? Let me know!