David Anderson had a deep-seated fear of debt, which led him to completely avoid his family’s finances for a few years. “It stems from the way I was raised,” says the 53-year-old legal professional in Toronto. ”I was taught that debt was bad.”
Make appointments with all the professionals on your team – your advisor, but also your accountant – so both members of a couple get advice together and ensure both people’s goals are incorporated into a plan.
Anderson’s wife managed their finances, including paying the bills, but when he started to sense that she was accumulating credit card debt, he decided to look at the balance. He was shocked to see how big of a bill his family owed. “I hadn’t logged in for over two years. I had no idea how much money was on our credit card, or how much my bills were costing,” says Anderson, who asked his last name be changed for privacy reasons.
Many couples deal with their finances the same way: one ignores them, while the other takes on the entire task. “A lot of people are afraid of dealing with numbers, or intimidated by having to go see an investment advisor, for example,” says Merideth Bisiker, a money coach in Qualicum Beach on Vancouver Island. Sometimes, it’s also because the couple gets together later in life and one party is set in their habits, says Christine Van Cauwenberghe, vice-president of tax and estate planning at IG Wealth Management.
Having one partner steer the financial ship can work, but it’s a risky way to run a household. The less financially savvy spouse might unintentionally throw off a bank account’s cash flow with an ill-timed purchase. The bill-paying spouse may slip up if they get busy, or begin to resent the workload. More seriously, things can go badly in an emergency. “Often when a spouse is incapacitated or dies, the partner is left to figure it out,” says Bisiker.
Here’s how the less money-savvy spouse can get up to speed.
Set a date to talk
Plan a time with your partner, whether it’s a Sunday evening at home or a morning at the coffee shop, to go over your finances. Ask your partner to gather any financial paperwork and be prepared to have him or her show you balances for your bank accounts, credit cards, mortgage statement and investments. It’s also important to understand how much you earn as a couple, compared to what you spend and if there’s any debt, what the plan is to pay it off. If this sounds like too much for one meeting, spread it out over several days so you don’t feel overwhelmed.
Meet with an advisor
Make appointments with all the professionals on your team – including your financial advisor and your accountant – so both partners get advice together and both or their goals are incorporated into a plan. If you don’t have a financial advisor, seek one out who can explain things to you in layman’s terms, suggests Bisiker. The spouse who doesn’t get involved in finances won’t know as much and will have more questions, but even basic queries need to be welcomed and addressed.
Plan ahead, together
Ideally, get up to speed before there’s a problem or a big life change. Van Cauwenberghe suggests having a power of attorney in place, so you can act on your spouse’s behalf in the event they cannot manage their own finances. Even if one spouse handles more of the money, everyone should know how to log into bank accounts, find incoming and old bills and where key household documents are kept. Then, if there is a crisis the other person can easily take over.
Deal with any problems
It’s possible that once both spouses take a look at their money together, they will discover things have not been going well. You may realize that your spouse wasn’t managing things as they should have been, or that you are uncomfortable with how much money you’ve been spending. Bisiker says it’s important to remember there’s “only one way to go, and it’s forward.” Take time to process what you’ve learned and then make a plan with your partner to get your finances back on track.
Seeing that credit card bill made Anderson think twice about staying out of the family finances. The couple worked with a financial coach and got rid of their debt – and started saving more. While Anderson admits the prospect of going into debt again still scares him, he now checks account balances a few times a week, pays some bills and has a clear sense of the family’s financial picture. “We manage it together and have conversations about it now,” he says. “I’m not in the dark anymore.”