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Do You Both Know Your Financial Situation?

Do You Both Have a Handle on Your Finances?

Do you and your partner have a good handle on your finances?

The question is an important one for couples to contemplate, says Jennifer DePriest, a Schwab Financial Consultant in the New York-Upper East Side branch.

Although most women are involved in day-to-day financial decisions, research shows that many women bow out of discussions about the couple’s long-term plan and investing strategy. This may leave them feeling unprepared if there’s a breakup or their spouse passes away. In some cases women break off the connection with the family’s financial consultant when their mate dies—potentially disrupting, or even jeopardizing, their future security.

To ensure that the financial road ahead is a smooth one, “both partners need to make sure they grasp the entirety of their financial picture,” says Jennifer. “Couples should be on the same page—or know what the other is thinking—throughout the entire planning process.”

To keep both partners engaged for the long haul, consider the following five steps.

  1. Review your accounts together

    One of the most important aspects of financial planning is knowing where you stand. As part of this process, you’ll want to set time aside to go over your separate and joint account statements. Each partner should have a clear picture of current finances. This will set the stage for deciding what you want to accomplish with your money and how you want to invest it.

  1. Focus on mutual goals

    Next, you’ll want to zero in on your goals. What are your top priorities? Saving for a secure retirement? Planning to buy a second home? This can be an excellent opportunity for you and your partner to step back, rethink and agree on what’s most important to you both. As you talk through your shared goals, try to be as specific as possible by including a dollar amount and timeframe, Jennifer advises.

  1. Compile a list of questions or issues

    Both partners should come up with their own list of concerns and then compare notes. The key is to not make any judgments about the other person’s questions. Women, for example, have specific financial issues to consider, such as a longer life expectancy. Both partners will benefit from being involved in these discussions. If there’s a tendency to let the more knowledgeable partner take the lead, work to balance the scales. If you’re working with a consultant, you will want to schedule time together to have your mutual and individual concerns addressed.

  1. Let your consultant mediate touchy issues

    Bring your disagreements to the table. “It’s important to meet with your consultant together and separately,” Jennifer says. “Often one spouse has a very different idea about the amount of risk they’re comfortable with, or how much insurance they should have.” Couples can also have different views on spending or different charitable inclinations. The consultant can help partners talk through these issues and arrive at a comfortable agreement.

  1. Monitor your progress together

    It’s essential that you both continue to monitor your progress and make adjustments as your goals, priorities and timeframe evolve. This can be as simple as a quarterly check-in on your portfolios online or as detailed as an annual financial checkup with your consultant. “What matters is that you make monitoring your progress a scheduled exercise that you do together,” Jennifer says.

Division of labor

Even if one person takes more of the lead with financial planning, there are a few key things that the other spouse must know, Jennifer says.

  1. The location of all of the assets, including the account numbers and passwords, how they are titled and their beneficiary designations
  2. The contact information for each account at all the family’s financial institutions, including insurance contracts 
  3. Regular updates on the retirement plan and other important goals such as education savings
  4. The plan for the distribution of assets during the couple’s lifetime
  5. The couple’s estate plan, including wills and any documents related to trusts or powers of attorney

Jennifer has couples complete Schwab’s Asset Inventory Worksheets and suggests that clients put together a binder with this information. Partners should review and update their material every year.

Double benefit

And remember that there’s a dual benefit when a couple builds a better financial relationship, Jennifer says. “Working together helps the spouse who is not as involved feel more comfortable with the family’s financial security—and it helps support the spouse who has been bearing most of the responsibility.”

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Important disclosures:

The Personal Portfolio Review is complimentary, although the implementation of any recommendations made during the consultation may result in trade commissions or other fees, charges or expenses. The Personal Portfolio Review is available only to clients with at least $25,000 in assets at Schwab or prospects with at least $25,000 in assets available to bring to Schwab. Individualized recommendations are available only to Schwab clients and are limited to assets held in a Schwab retail brokerage account.  Information provided to prospects, or pertaining to assets held outside of Schwab, as part of a Personal Portfolio Review are examples of the kinds of recommendations available on assets held at Schwab; these examples do not constitute recommendations, solicitations or investment advice.

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.

There are eligibility requirements to work with a dedicated Financial Consultant.

©2016 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

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