Being in a relationship does funny things to our hearts, as well as our heads – particularly when it comes to personal finance management. It is not uncommon for older married women to behave in a very contradictory fashion: they cede all financial control to their husbands, but at the same time, they are far more likely than their partners to keep a secret stash of money just in case.
Women often confuse money with love. Being taken care of financially can be, in their minds, equivalent to being cared for. The fear of becoming a bag lady – held by an absurdly high number of women, even affluent ones – is probably more about running out of love than it is running out of money.
I am often asked by married women if they should keep their finances separate from their husbands. Rarely do I answer yes. Marriage is, after all, an economic partnership which involves working together and pooling resources for shared goals: a new home, college educations for children, retirement abroad. If, however, the goals are different, as is often the case with second marriages and a separate menu of kids, then some segregation of resources is probably in order.
On one point, however, I am far more absolute: all women, married and single alike, need to be thinking and planning their financial futures separately from their partners. This does not replace joint financial planning, but must be done in addition to it.
The reality is this: Whether in stable relationships or not, women will likely be alone at some point in their lives, often for a significant period of time. The Census Bureau reports the average age of widowhood at 56. Even for couples celebrating their golden anniversaries, the wife is likely to survive her husband by several years. Divorce, too, is a stubborn modern-day fact. In a 2002 study, the National Center for Health Statistics found that 30 percent of couples are divorced or separated within the first ten years.
The transition from coupledom to singlehood is rarely gentle and never simple. A time of difficult, even violent emotions, it’s hard to think, even breathe, let alone make decisions about finances. But money issues loom large when you become single again: What’s mine? What’s not? Where will my money come from? Whom can I trust? What needs to be done/changed/closed/opened/paid?
The best time for planning to be single is when you are not. Think of it as a form of insurance, contingency planning, or emergency preparedness.
• Set aside money now that you might need in the first few months of being single, just as you might stock up for a natural disaster on bottled water, duct tape, and canned goods. This isn’t your secret money: it’s a survivor fund and as such, should be completely acceptable to your partner. He should probably have one, too.
• Create a phone list of the people – a CFP® professional, banker, accountant, attorney – who can help to orient you in your new financial situation.
• If you have a planner now, ask him or her to prepare some what-if scenarios addressing your financial situation in the event of divorce or the death of your partner.
You might also ask your planner to meet with you separately, even if you are doing planning as a couple. Take this time to express your financial goals, preferences and issues from your own perspective. Again, this is not about going behind your partner’s back. (Indeed, if a planner perceives that you and your partner have a true conflict of interests, he or she should identify it as such to both of you, and find a resolution before continuing with your planning.)
You want to establish your own financial identity – how you think about finances, and the way you wish to be addressed and involved by both your planner and your partner. Some planners might want to think of you and your partner as one client, but in fact you are a team of two individuals. The distinction is subtle, but important to your financial future.
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