Couples normally fall into roles when it comes to finances. It is very normal to have one spouse pay the bills while the other handles the grocery shopping. Or one spouse is in charge of investing while another handles paying down the credit card debt.
When we get comfortable in these roles, we can forget that it is important for both couples to have a full understanding of the family’s finances.
An emergency might happen where a spouse is unable to handle finances for a short or long period. Then, the other partner needs to have the ability to step up and handle the situation until things are back to normal.
Set some time aside and discuss the following topics with your spouse so both of you have full knowledge of what is happening with your money.
Keep a list of all your financial accounts in one secure place. If one of you has a medical emergency, the other person needs to be able to access money quickly and easily to pay the bills.
You might think you only have a checking and savings account, but many people have many more financial accounts. For example, you might have:
We all think bad things won’t happen to us, and hopefully an unexpected death, injury or house fire will never happen. But just in case, make sure your list of accounts is up to date and that the correct beneficiaries or account holders are listed.
As you are writing your list of accounts, also ensure that the correct beneficiary is listed on the account. At work, many times your spouse is the default beneficiary for retirement savings funds, but this may not always be the case.
Make sure your children are listed if you want them to benefit. Check that your spouse is listed correctly on all items.
If you have a separate bank account for your fun money or separate credit card for spending on the kids, now is the time to verify your spouse is listed as an account holder (or at least listed on the account). If something happens to you, the account can be accessed or closed easily.
It’s never fun to discuss your will or what will happen if you are incapacitated in the hospital. But it is even worse to have something terrible happen and leave your spouse unprepared. Everyone needs to have the following items ready and up-to-date:
A. Will – A will is essential if you pass away and have anything in your name. A will is of even greater importance if you have children, pets, or family items that are important to you.
In many states, if you have no will when you die, your estate is handled through the court system. Go ahead and get a will completed for each spouse, especially if your life has changed since your last will – (children, moving states, additional property, etc.).
B. Medical Power of Attorney – If you are unconscious in the hospital, it is necessary for your spouse to have a legal document that allows him or her to make medical decisions for you.
A medical power of attorney document can be drafted to allow other family members, friends, or trusted advisors to make a decision on your behalf. Consider this in case you think that it would be too difficult for a spouse to make a difficult decision or if you regularly do activities together that might leave you both injured at the same time.
Medical power of attorney will also outline what you would like to happen regarding life-prolonging medical treatments if that need arises. These documents vary by state and only go into effect if you cannot make decisions on your own.
C. Financial Power of Attorney – Similar to a medical power of attorney, this document allows another person to make financial decisions/transactions on your behalf if you are not capable.
This could include times that are less serious. For example, if you were traveling out of the country and unable to sign a document.
Financial power of attorney could also be used if you were incapacitated and your spouse needed to gain access to financial accounts for you. Make sure your financial power of attorney is set up correctly for your state.
Finally, discuss with your spouse where you will keep your list of accounts and all your important life papers.
If your house were to burn down, where could you find a copy of your insurance policy and the number for your agent?
Consider giving a copy of your data to a trusted family member or keep it secure in an online lockbox storage system. If you keep copies in your house, put them in a fireproof box.
Some people put important information in a bank safety deposit box. This might work for you. Keep in mind that they come with a yearly fee and if a natural disaster were to hit your area, it would also impact the bank as well. Keep your documents safe and somewhere you could gain access to them if you needed to leave your home or area.
Once you have this conversation and get organized, you’ll be a financially knowledgeable couple who can handle an out of the blue situation.
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