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What Should I Know About My Family’s Money?

What Should I Know About My Family’s Money?

March 22, 2018

I was talking with a client recently and she mentioned a dear friend who had recently lost her husband. While the friend was working to settle the estate, to her surprise she found that she was not listed on some accounts and that she had almost no personal financial history of her own. This was a major challenge for the friend during an already difficult time.
Often, I meet with clients as a couple. Many times, one member of the couple is not engaged in the details of the meeting because they want the other person to handle money matters. And, more often than not, the disengaged partner is the woman.
When I notice this dynamic, I try to gently challenge it by pointing out that most times the female partner outlives the man and she therefore has a large stake in the family finances and how they are handled. By the time a widow inherits the family money, it’s often too late to make much change if change is warranted.

Women’s financial literacy

Research shows that it’s quite common for women to be less financially informed. Most women—85 percent—don’t know how to invest or make a decision about a financial product, according to a Prudential study on women’s financial literacy. And a more current study confirms that women’s financial challenges persist. In a 2016 study done by the FINRA Investor Education Foundation, women averaged 38 percent correct answers on a short financial literacy quiz.
I think that women today are better informed than they have ever been, but as my client found, we can all be surprised by what we have overlooked. FINRA has a great trove of resources for women to boost their financial literacy, which is a great place to start. And here are three things I tell every female client she should know—or needs to learn—about her family’s money right now:
How much do we earn each year? This time of year many families are preparing taxes, so it’s a good time to gather this information. And it’s prudent for every woman to know where copies of the last two or three tax returns can be found. For many of my clients, they are surprised by how much they earn. When you combine two careers it’s easy to lose track of the family total. This can be an excellent starting point for a conversation about family financial goals and priorities.
What do we own? Every year, at least, sit down to review where you stand. What do you own? Who do you owe? Whose name is on all the statements? Who do we contact with questions? Be sure to include:

  • Bank accounts
  • Investment accounts
  • Real estate
  • Life insurance
  • Retirement accounts

Make sure both spouses know which financial organizations are servicing each account or insurance policy. If you do an annual review with the help of your financial planner, you can come up with a family net worth statement. Tracking this value year after year can be a very helpful measure of how you are doing financially.
What does the will say? For many families, they either don’t have a will or it’s outdated. It’s a good idea to check so there are no surprises. A will directs how all the family assets are to be distributed at the death of each spouse and after both spouses are gone. These wishes can change a lot in 10 or 15 years.
If your documents are more that a couple years old, I always recommend you have an estate planning attorney give them a quick review. As estate planning laws and practices change, it’s always better to be safe than sorry. And, you should get a quick review at no charge, so why not?
When you review your estate documents, be sure to that you see these four essential documents:

  • Last will and testament to provide overall instructions;
  • Health care proxy or durable power of attorney for healthcare to identify who should decide medical matters for you if you can’t;
  • Living will to specify end-of-life wishes; and
  • Financial power of attorney to identify who should decide financial matters for you if you can’t.

Answers to financial questions

If every woman reading this checks all three of these areas, it’s very likely she will have questions. Couples often find it hard to talk about money, so getting those questions answered can be tricky. Sometimes, it’s good to have a financial planner involved. It can be especially helpful if that planner is always an advocate for his clients – a fiduciary advisor – and if that planner only gets paid by his clients – a fee-only advisor. A fee-only, fiduciary advisor can be a great resource for unbiased, professional advice about how to proceed.
If you think you might want help understanding your financial situation, or you just want to talk about it, contact my office at I am always happy to meet with people who are working on their financial goals. Yes, I am a fee-only, fiduciary advisor. And, yes, I am still taking on good clients.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.