Who's the 'Alpha Finance Person' in Your Family?

NOVEMBER 19, 2009
Robert J. DiQuollo
If it’s not you, you still need to know your financial situation. Knowledge can prevent a crisis from becoming a disaster.

If you’re not the financial decision maker, it’s the path of least resistance to let your spouse handle everything and leave yourself in the dark. Big mistake. If a crisis arises in your family–such as the loss of a job, divorce, hospitalization, disability, or death–you’ll be terribly handicapped if you know little or nothing about your financial situation.

But if you know what’s going on and have basic contingency plans, a crisis won’t become a financial or lifestyle disaster. Here’s a checklist:

What you’re spending: total your monthly expenses for mortgage or rent, car payments, food, utilities, insurance, recreation, charity, memberships, education and so on. Which expenses are fixed and which are discretionary? Are recurring expenses automatically deducted from a credit card or bank account, or do you have to write checks?    

Good times can hide excessive spending. But when one partner is laid off and the bills start piling up, the other may be shocked to find out they’re spending.

The location of key documents: know where to find all insurance policies, bank and investment statements, wills, credit-card records and passwords for online banking and investment access–plus the key to the safe-deposit box. If you work with a local financial firm with whom you feel comfortable treating as a trustee or advisor, the firm can store copies of your key documents as a safety net.

Your assets and asset profile: Have a list of major assets, including all retirement plans. Which assets are liquid and which aren’t? Is your investment portfolio well diversified or too concentrated in high-risk investments or safe but low-return vehicles like CDs?

Insurance coverage: Do you and your spouse have adequate insurance? Many people have life and disability insurance through their employer. That could be a problem if your spouse is laid off.

One way to become financially educated is to visit a financial professional with your spouse. To figure out what type of financial advisor would be right for you, ask yourself: ‘Would I trust this person enough to advise me in a crisis? Would I feel comfortable letting him or her hold the key to my safety deposit box?’

It’s easy to put off all this off till tomorrow, but tomorrow may arrive before you’re ready.

Robert DiQuollo, CFP, CPA is principal with Brinton Eaton Wealth Advisors in Madison, NJ.  He can be reached at diqullo@brintoneaton.com.

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