How involved are you in your family’s finances?
In a Pew Research survey conducted a few years ago, nearly one in four women said their partner was the one primarily managing the household finances. And a separate informal survey by The New York Times last year, found that many women deferred managing their household’s finances to their spouses and, of those women, very few knew basic details such as the interest rate on joint mortgages, passwords to shared savings accounts and how much each spouse earns after taxes.
While it’s convenient – and in many cases fine – to have one person assume a more hands-on role in the financial workings of a household, if that person isn’t you, (or even if it is, be sure you both) at least know this…
All Sources of Income
If for nothing else, know each and every penny your spouse earns to detect whether your joint tax returns are, indeed, being filed accurately. If your sole duty during tax season is to quickly sign off on a joint return – after your spouse’s filled it out – at least verify the line on the first page that states the household’s after-tax income.
Beware that you may both be on the hook for filing errors on joint tax returns. Speak to your spouse or family accountant if you have questions.
What Constitutes “Marital Money”
In many relationships, marital money includes shared assets, any and all accounts with both your names on it, such as your home, a joint savings account and an investment portfolio. But it’s still important to keep tabs on what’s rightfully yours, in the event of a divorce. For example, if you want to be the sole owner of an inheritance – or any asset – place it in an account that strictly bears your name. You can also use a prenuptial or postnuptial agreement.
Is Your House Really Yours?
This may sound like a silly question, but there’s sometimes confusion. People may falsely assume that because they’re name is on the mortgage, they can claim ownership of the home. It’s true that having your name on the mortgage makes you liable for the debt, but is your name on the deed, as well? If not, then your home isn’t technically yours.
Same could be true for your car and other big-ticket possessions if you’re name is not on the deed.
If your spouse ends up in the hospital for a few days or can’t manage the accounts for a period of time for whatever reason, you’ll want to know how to access each and every financial account. Keep a running list of all online account usernames and passwords including – but not limited to – your family cell phone plan, utilities, mortgage, joint credit cards, brokerage accounts and insurers.
Keep a hard copy in a fireproof lock box in your home or safe deposit box, as well as on websites like One Password, PassPack.com and Clipperz.com where you can securely store all your household passwords in one place for free.
Even if your husband is the one who regularly handles the bills and accounts, make a habit of checking these accounts once a week to make sure they’re in good standing. A site like Manilla.com allows households who wish to check up on all their accounts and paperless statements in one place.
Our Debt Versus His Debt
Your husband’s personal debt brought into a marriage – as long as it doesn’t bear your name – is not your liability. However, if your spouse folds that debt into a shared home equity line of credit or transfers it to a joint credit card it will be yours. While he may promise to be solely responsible, realize that you’ve technically still inherited his debt and are equally responsible.
If your husband has a lot of personal debt, it may be best to maintain separate credit accounts. Check your credit report annually to make sure you recognize all the credit and loan accounts stated under your name. Visit annualcreditreport.com to download a free report from each of the 3 major credit-reporting agencies.
Know Your Family’s Financial Professionals
Do you know who your accountant is? How about your home insurance agent? Financial advisor? Attorneys?
Similar to how you keep a running list of your account passwords, maintain a roster of the who’s who in your financial life so that you can contact these people in case of an emergency. Also know who you need to contact if you need to access your will.
Got 10 minutes? Want to earn chance to win cash? Financial expert and author Farnoosh Torabi is conducting a survey for an upcoming book on money and relationships. At the end of the survey, learn how to qualify for a $100 American Express gift card giveaway. There’s one each week for the next several weeks. http://tinyurl.com/