For purposes of this post I will assume you are married, in a committed relationship, or are sharing financial management with someone. There are a few ways that couples can handle finances:
A) One partner does it all. Either through natural talent in this area, long term experience, or simple enjoyment, one person handles all the bill paying and making the financial investment decisions. This can occur with either the approval of the other partner, or acquiescence to maintain harmony and eliminate arguments.
B) The partners split the responsibilities for financial well being and maintenance.
C) The partners maintain separate accounts so each person pays his or her own bills. Joint decisions are made for major investment and tax-related issues.
D) A financial advisor or manager takes care of it all. For those with a sizable estate and nest egg, having a professional handle financial matters is an option.
I have no experience in either choice C or D so my ideas would not be helpful. If you do fit either of the last two options, please, chime in with a comment. Your experiences and reasons for your choice would be very helpful to us all.
For purposes of this post I am going to assume that most of us are either in group A or B and are looking for ideas on how others handle their financial life. I will give you a peak into how Betty and I handle our financial decision-making and duties. Then, most importantly, I will ask you to share your story. Since there is no right answer, all input, all suggestions, and all ideas help everyone one of us refine or rework our personal strategy.
In our household I have been the primary financial manager for all 37 years of our marriage. Even though I was rather poor in mathematics in school, for some reason I do enjoy the process of budgeting, keeping on top of our financial health, and dealing with our financial advisor. He has been part of our life for close to 20 years and is a trusted source of advice. Sure, he has made some bad recommendations that went sour. But, overall, his suggestions and awareness of our risk tolerance enabled us to retire almost 13 year ago and have a nest egg that is actually bigger than when we started our satisfying retirement in 2001.
We are aware that she needs to have a handle on some of the basics of our finances: where the money is, passwords and on-line bill paying details, key contacts, tax information, and the like.
She and I will admit that this "training" has been a series of starts and stops. Betty maintains a book that takes her through the key information she would need to know and how to perform some important tasks. But, that book goes out of date often, what with changed passwords, different things in our investment accounts, changing tax conditions...even different computers and browsers that have things stored in different places.
Like everything else, using her "blue book" on a regular basis should occur to keep her familiar and comfortable with the very steps. But, she will be the first to admit she dislikes this process. She becomes easily distracted and anxious if something is slightly different than it appears in her guide book. Dealing with the financial side of our life together is one area she knows she should take more seriously, but doesn't. Part of that is do to problems with her short term memory, and part because she simply doesn't enjoy it.
That approach worries us both since it is likely I will die or become disabled before her. Without having a solid handle on the bare minimum of things like getting into online accounts, when important bills and real estate taxes are due, how to handle credit card bills and communication, she would have a very rough time. For 2014, we both must commit to doing a much more consistent job of keeping her in the financial loop.
So, my most important advice is to not do what we have done! Both individuals must have enough awareness to hold things together after a life change until others can be brought in to help. Not liking the world of finance and investments is fine. Not knowing enough to stay afloat for even the short term is not. Someone once said, finance is the art of passing money from hand to hand until it finally disappears. Our responsibility to the people we love is a bit more complicated.
Now, your turn to help us all.
How do you and your spouse or significant other divide up your financial responsibilities and duties? Is this an area of discord and arguments? What works best for you? Where is your game plan not quite up to par? What changes in how you approach things would make sense?