If you want to do your spouse a favor, you should pretend you don’t exist… At least for a few hours.
If you’re the one who manages the finances – and possibly earns most of the money – you’ll do your spouse a solid by simply going through this exercise.
Ask your spouse how they’d pay the bills if you were gone.
How would they pay the mortgage?
Where would the money come from?
How would they save for retirement?
Pay for the kids’ education?
Track expenses?
I recently asked a group of men in their 70s and 80s to think about how their spouses would carry on in their absence. They didn’t even understand my question. They looked at me as if I were from Mars.
They never took the time to think about what might happen to their spouses once they die. Rather selfish… Don’t you agree?
What? They’re going to live forever?
Are you?
You might love to run this “fire drill” at home but your spouse doesn’t want to take the time to do it. I feel your pain but want to encourage you not to acquiesce.
Ask your spouse to think about getting on an airplane. Isn’t it better knowing there is a trained co-pilot even if he or she never gets the stick? Of course it is.
Doesn’t your family deserve a co-pilot too?
You’ve worked hard to create a solid financial base, but it’s going to turn into “poo” if your spouse doesn’t have the skill to take control. How does that make you feel? How does it make your spouse feel?
I take this stuff really personally. I know what it’s like to try to pick up the pieces after the people who were supposed to be financially responsible weren’t. It’s not pretty. It’s not fun. Don’t let this happen to you.
So… What are the three most important steps in getting your spouse ready to take control?
1. Maintaining a budget
You simply have got to get your partner conversant in the language of “budget-speak.” Put them in charge of tracking your budget. This way, they’ll get a sense of where the money is coming from and where it’s going.
It doesn’t matter if you use an envelope system or a software package to track your expenses. Just implement a system and make sure your spouse takes charge of it.
I’ve done this at home even though I’m the CFP with 25 years experience and a degree in accounting. My wife keeps the books. She is in charge of the budget tracking, and we spend an hour every week going over the numbers to make sure we’re on track.
It’s been a game changer for me as I know it will be for you.
How do you introduce this system?
At first, spend that time learning together. Don’t get angry if your spouse is resistant or finds it difficult. Be patient. Give them time. But stick to it and don’t allow them to give up.
Get a commitment from your spouse that he/she will update the books each week at a set time. If they need your help, make yourself available during that time.
In addition, meet every month at a pre-arranged time. Go over what’s working and what needs to be addressed. Are you on budget? Are you saving as much as you planned? How are the investments performing?
2. Life insurance
If you have people who depend on you, buying life insurance is a must. Term is my insurance of choice because it’s cheap, and it gets the job done. Talk about this with your spouse. Tell your spouse how much insurance you have, why you have it, and what should be done with it in case you get taken out.
3. Books and records
Create instructions on how things should be handled in case you die prematurely. The instructions should cover:
- What to do about living trusts and wills
- Who should be contacted
- How to generate income
- Where the investments are and how to manage them
- Where the insurance policies are and how to cash them in
In my experience, these are the three crucial steps to take to get your partner involved with your finances.
I understand that it may not be easy for you to ask your spouse to take these steps with you. I understand that even bringing up the subject could be very uncomfortable. But I also know (first hand) that failure to do so exposes your spouse and your entire family to tremendous risk.
Take these three steps. Start with step one. Start today.
Hi Neal,
YNAB cost and some lack of functionality doesn’t fit my needs but thanks.
Any other ideas?
Jerry, I love YNAB. Have you looked into it?
How can I budget easy? I failed at manual entry spreadsheets and keeping up with my bank account transactions is what I need. Any software out there that is affordable and able to import my bank transactions? That would be the way I would be able to keep up and trend what in the world is going on with my spending.
Thanks everyone.
Term tends to be cheaper, if that’s a concern for you. If you’re only worried about funeral expenses, I recommend going to the funeral home/cremation center of your choice, and speaking to a funeral director or advanced planning coordinator. They will be able to help you figure out what’s the best option for you personally. A “traditional” funeral with ground burial runs around $10,000 and up in the Midwest these days, and depending on your wants and needs, it could be much higher or much lower.
It doesn’t cost anything but time to meet with someone who is trained in this line of work, and they’ll be able to provide much more guidance than I can from here.
I’m hiv + and Hep c I want to get Life insurance so the cost of funeral expense won’t fall all on my partner what should I get Term or reg
While term life is a fantastic idea, I think there’s one more thing missing. I’ve made my career from advanced funeral planning, and getting some funeral plans in a file (either with your chosen funeral home, or with a trusted loved one) is one of the easiest ways to lift the burden. There are programs where you can arrange and pay for everything in advance, and the price can be guaranteed.
Even if you choose to let your life insurance cover the costs of your funeral, having your wishes planned out makes a difficult time simpler for the ones you leave behind. Being able to make one phone call and a few simple decisions rather than choosing everything will make a world of difference.
In the paperwork category – do a list of account numbers, contact info and (possibly encoded) passwords for ALL assets and liabilities.
Personally, I found three “lost” accounts after W died that were from before my husband and I were married – two were old credit cards with zero balances from when W was in the Marine Corps, but the other was a paid up life insurance policy that his dad had taken out on him when he was just a teen. I actually signed that one over to my Mother in Law, since we’d never paid a penny on it.
I had 2X my salary through my employer also – but purchased additional term insurance also. I went ahead and purchased the amount we thought we would need without my employer’s insurance (in case I decided to change jobs or, heaven forbid, got laid off). And good thing we did! My employer JUST decided they are going to replace the 2X salary with a flat $25K (which I think became effective this month). SHEESH! They might has well just do away with it completely!
I have insurance through my employer with an automatic 2X my income and decided to purchase accident insurance also. I think term is the best in regard to quickly taking care of a spouse and kids needs for years to come. I really like the organizing the paperwork aspect of this article and the comments made of having a 3rd party keeper just in case the couple had something happen to them and then you have the kids scrambling. Good Article, not something we always want to think about but something everyone needs to do.
@almost there – I agree that there is a place for both term and permanent insurance, but as Neal points out, term is the answer for most of us. We identified four of the most common here: http://bit.ly/a8aXup
@Greg – There are some eye-popping numbers associated with the percentage of term policies that actually pay a death benefit. Some years ago, it was running around 3% or so which means that 97% of all term policies never pay out. At first glance, this looks like quite the scam, but if you consider the fact that most term policies are cancelled after just 2 years (and all the administrative costs associated with them), the 3%/97% is inflated.
I wouldn’t put term insurance in the light of ‘exploiting’ individuals or families as it serves an important purpose as any insurance does (large loss principle). That said, there are many abuses that occur in the life insurance sales process that can quickly turn a well-intentioned purchase of insurance into a soon-regretted exercise in stupid tax.
I have term and universal life ins. Uni is paid up and cost 1x amount and is worth over 1.5x as of now. Meaning if I cash out I wouldn’t be any money out but at a gain. I can borrow on it. Use it for long term care or have my heirs take interest only payments and leave the principal for 30 years without cashing it out. Since inception the interest the money earns is well above the official inflation rate (but not more than the real rate of inflation as published at shadow stats site).
I think Greg is getting mixed up on the buying other than term and investing idea. The expression was touted by anti whole life insurance guru A.L. Williams, “Buy term and invest the difference”.
I see room for both kinds of insurance for financial security.
I’m with Neal on the life insurance thing.
“There are better ways to invest your money, ways that don’t require you to die.”
So here’s the thing… Term life insurance isn’t intended to be an investment. It’s insurance. There’s a difference.
Life insurance serves a very important need for those who need it, but you’re right that not everyone does.
In my case, we have four relatively young kids, and my wife and I both have 20 year term policies. Mine is bigger than hers because I’m the breadwinner. However, my wife’s “job” of staying home with the kids also has significant monetary value, so she is also insured.
While we could invest the premiums instead of buying term life, the proceeds would be a pittance relative to the needs that death would create, and thus wouldn’t be anywhere near sufficient if one of us died — even factoring in increase future earning power.
That’s the whole point with insurance. You insure things that you cannot afford to lose. We do this not because it’s a good investment, but (in our case) because it would be disastrous for one of us to die without insurance.
Greg,
I am a huge fan of term life. I have a bunch of it and will be very happy not to collect.
It’s a tool that serves a purpose – to protect my family until I no longer need it.
I have a personal experience with this issue because my father died when I was 17. He had a little insurance but it was enough to get me though college. Without it, I have no idea what my life would look like today.
If you have people who rely on you, I strongly recommend that you look into this with all due respect.
I don’t have any life insurance but I plan on getting some when I have children. As we’re dinks at them momement my partner will just sell the rental and she’d be fine.
Life insurance? So at the end of the term, you have nothing to show for it? There are better ways to invest your money, ways that don’t require you to die.
Yeah, I know, you have a spouse and kids and how are they going to survive if you’re just a greasy spot on the pavement? Most people underestimate just how much those kids and that spouse can earn by the end of the term. And besides, you’re almost certainly not going to die within the term anyway. Life insurance exploits people’s innate inability to assess risk life like no other industry.
Even though my husband makes more money, he would have no idea how to pay the bills if I were gone. We have a small business too and he wouldn’t know the first thing. This article really gave me a kick to make sure that somethings are in place for us and like the previous commenter said too, make sure someone outside the home knows the info too.
If you have kids or dependants other than your spouse, you should also leave the instructions for #3 with a trusted friend/family member in case something happens to both you and your spouse at the same time. I made copies of our plans and gave them to my aunt – who is the named guardian in our will. So if something happens to both me and my hubby, my aunt will not have to fumble around to find the most recent copy of our wills (she has our lawyer’s number), our life insurance policies, or all the bank accounts/investments. Although, I realize I need to update that as I have changed (added/moved) some accounts in the last year.