Splitting the Bills? 3 Essential Steps to Organize Joint Finances

Splitting the Bills? 3 Essential Steps to Organize Joint Finances

A happy and healthy marriage is a beautiful thing, isn’t it? It gives space for both spouses to thrive. It should provide the support needed to achieve their goals, both collectively and individually. But only a fool would tell you that a happy marriage is easy. Much like your car, your body, or even your financial plan, it takes constant input and regular health checks. And it can throw you some curveballs that are particularly difficult to deal with.

When I deal with my clients’ investment and wealth management, I like to find out about their personal circumstances. No, I’m not just a nosy busybody, but knowing what their personal landscape looks like helps me to give them the best financial advice that I can. And their marriage plays a part in this as well, simply because I have seen too many disasters unfold for people when they manage their marital finances poorly.

While I could write a whole series of posts on marital finances, there’s something that worries me more than most for couples I meet. It’s a difficult subject to talk about, so I’m just going to tackle it head on – as you should, too. It’s something we don’t like to think about, but being poorly organized with your finances can have devastating effects for your loved one if anything were to happen to you suddenly. So to avoid compounding a disaster with disaster, how should married couples organize joint finances?

Who Does the Financial Decision-Making In Your House?

Would you say your marriage looks like that of your grandparents? In many ways, probably not. The chances are that your grandfather controlled most of the larger financial decisions, whereas your grandmother is likely to have run the domestic financial affairs on a day-to-day basis. Have a think about money in your relationship – how true is this for you? And how do you organize joint finances?

Currently, nearly a third of women say they lead on financial decision-making in their house, and 46% say that it is an equal responsibility. If those figures play out, that means that more than half of American women do not feel that they play a significant role in their household’s finances – and that troubles me.

Let’s just take the simple facts – women tend to outlive their husbands. So a married couple’s financial situation needs to accommodate for the fact that the woman is fairly likely to become solely responsible for her household’s finances, at some stage. If she has remained largely hands-off in terms of their money throughout their marriage, she may well end up having to make some very big decisions at a very difficult time.

Two Vital Things to Organize Joint Finances

My married clients are loving life, either enjoying their retirement or eagerly looking forward to it, with lots of excited plans for the future – together. So it’s no wonder they don’t like to make arrangements for the absence of the other. I understand that fully. And while we’re not going to discuss the ins and outs of estate planning or wills here – you need a whole other set of advice for that – you can make things simpler by addressing two things.

Those two things are simple: knowledge and access. You need to have a good knowledge of your household’s finances, and you have to have access to the necessary information and funds. Now, I don’t necessarily advocate for each partner knowing all the intricacies of the other’s finances, but I don’t advocate against that either – that’s for each couple to decide what’s most comfortable for them. Knowledge of where and how the domestic bills are being paid is essential. It’s a key part of considering how to organize joint finances.

I’ve seen a widow left completely dumbfounded by their financial affairs, because she had no idea what was going on. She assumed an attorney would have all the details and would be able to access her late husband’s money easily. It’s not that simple. When her husband passed extremely suddenly, this poor lady was left penniless for months, relying on the kindness of relatives and friends, because she couldn’t access what had been her family’s money to pay bills and make other regular payments.

Three Steps to Make It Easier

Just reflect for a moment – if something awful were to happen tomorrow, would you or your partner be okay? Would you have to deal with financial stress at the same time as personal trauma?

There are three straightforward steps you can take to avoid this happening.

#1. Put a support team in place

I recommend to my clients that as well as having an investment manager or wealth manager on their team, they also have an estate-planning attorney. They have a bank of knowledge and experience essentially at your disposal, and will ensure that you have all bases covered. That means that if your partner becomes a widow or widower, they won’t be dealing with any nasty surprises at an already challenging time. It’s very difficult to make important decisions at emotional times, and effective estate planning can take that burden from your shoulders.

An attorney can also help to make sure that wills are kept up to date by reviewing them periodically and taking into account any change of circumstance. Depending on the type of account, they can ensure that a personal account is transferable on death to the other partner and just make sure that everything is ready to go when you need it. It’s vital that neither partner takes a back seat at this planning stage – they both need to have the complete picture. And I’m afraid to say it, but it is never too early to put this in place.

#2. Use accounts trackers and review them regularly

As I said earlier, I don’t advocate for or against a detailed scrutiny of your partner’s personal finances. Risks are associated with both – financial abuse through control is very real, and there should always be independence and trust in any marriage. The bottom line is that domestic, joint accounts must be accessible by both partners, and both should be familiar with all joint assets.

Both partners should be able to review and access the accounts and assets when they need to. There are some excellent online tools to do this, and your bank may be able to provide you with their own tracking app. They can organise your monthly budget, send bill payment reminders or even pay them for you, and show you your investment portfolios and their progress.

Because I truly believe in the power of these trackers, my clients have access to some financial planning software called Right Capital, which aggregates all their accounts and tracks their net worth.

#3. Use password storage software

As our lives move online, estate planning has had to change. People can easily now hold digital assets – they may have bank accounts with online banks that they have never stepped foot into, and that provide them with no paperwork. A lot of investment is done entirely online. And let’s not even mention cryptocurrency and NFTs (although wealth managers of the future may be up to their eyeballs in them, who knows?!).

In the past, estate planning documents were paper-based and all the relevant documents were too. Not so now. The tiniest details of our lives are now online, locked behind multiple passwords – that are getting more and more difficult to remember, right? So using password storage software is extremely good practice.

Two pieces of password management software that I think are particularly good are Lastpass and 1Password. Using software like this, you can create a list of your online accounts and associated passwords, and then the password for that goes with your will. Your estate-planning attorney can help you make sure that the surviving spouse will have access to what they need.

Need Some Clarity for Your Peace of Mind?

It’s not as easy as it seems to organize joint finances, especially when traditional wealth management advice is just that – traditional. It’s not been very good at moving with the times. But joint finances get that bit more difficult now things have moved online, when second marriages are more common, and when the division of responsibility for domestic expenses is less clear cut.

And that’s why I like to get my clients on a more personal level – I get to see what their unique circumstances are, how that impacts their finances and how I can tailor my wealth management advice to them. I can also use my network to their advantage, by putting them in touch with excellent and reputable professionals to assist them with things outside of my remit as an investment advisor.

If you need any help to organize joint finances, please contact me – I’ll be only too happy to meet with you for a chat. We can work together to make sure that you’ve got everything in place, and all the professional support you need in difficult times.

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