Surprising Things Men and Women Don’t Know About Their Spouse’s Finances
Jun 17, 2009
(Springfield, MA) - Men and women may want to take a line from the movies and ask each other to “Show me the money” – talk to each other about the family finances. Who “owns” the assets? Will each spouse have to fight for what’s his or hers? And, are they putting their lives, homes, and assets at risk by not asking the right questions?
“Through death or divorce, many women will be alone at some point in their lives; they should be aware of their husband’s financial plan because someday they may have to live with it,” said Beth Wood, assistant vice president, Massachusetts Mutual Life Insurance Company (MassMutual).
“Conversely, for the growing number of households where the woman is the CFO, there’s no excuse for the man not to know what’s going on with the family finances,” said William Dougherty, assistant vice president, MassMutual.
Wood and Dougherty have developed five questions spouses and partners should ask each other.
1. Are there hidden pockets of money?
Identify all accounts including checking, savings, retirement, investments, on-line trading, IRAs, etc. If you’re left alone and don’t know about the money, it could go unclaimed and neither you nor your children would get the cash. With today’s technology and being able to receive statements on-line, there’s no paper statement that necessarily comes in the mail. A spouse may just get an email that says ‘Here’s your statement.’
“Communication between spouses can be good - trying to "hide" money really won't work in the end especially if you file a joint tax return - you don't want to hide money from your spouse and you certainly don't want to hide money from the IRS, so full disclosure and honest communication about financial goals is key,” said Dougherty.
2. Am I the owner of this account?
One spouse may have opened a checking, savings, or investment account; but if you're not named as owner or beneficiary, there could be issues and complications as to how that money gets distributed in the event of death or divorce. It's a good idea to know what accounts exist, where they exist, and whether you're an owner or beneficiary.
“This isn’t about one person snooping on the other; this is about working toward a healthy financial life and relationship. If there are secrets out there or things you don’t understand, that can never lead to any good,” said Wood.
3. Are you cheating?
Anyone in the relationship could run up huge credit card bills. Is someone living beyond the budget? Are you saving for college, mortgage payments, cars, and vacation – or is someone spending their money on “toys?”
“If you don’t share and stick to common financial goals, it can break the budget and the marriage. There may be an awful lot of spending for sports, electronics, spa treatments, and clothing outside the household budget,” said Wood.
4. Where’s my cut?
Have a budget, but don’t let it be your ball and chain. It’s important to do things for yourself. Peel off a portion of the household income for things important to you - but don’t call it an allowance.
“It’s important that each spouse feels they are a valuable, contributing member of the household – whether they bring home a paycheck or stay home to take care of the children and run the house; both are full time jobs,” said Wood.
5. Have safety nets been pulled out from under you?
No harm done if the milk expires, but it could be a huge problem if a spouse’s life insurance protection expires. “There are critical differences between the many kinds of insurance people use to ensure the family can continue to pay its bills and survive if a spouse dies too early, lives too long, or becomes disabled along the way,” said Dougherty.
“If you have life insurance at work, it may be a term life insurance policy, which expires when you leave your employer; term insurance builds no cash value, does not earn dividends and runs out after a specified time,” said Wood.
Permanent solutions such as whole life insurance never expire*; whole life guarantees a death benefit, has a strong history of paying dividends, and is guaranteed to build cash value that can be used for such things as mortgage payments, college education, retirement income, or emergency funding**.
There are more than two dozen free calculators at http://www.massmutual.com/calculators to help people determine their net worth, make realistic savings goals, and plan for their future.
*As long as premiums are paid.
**Dividends are not guaranteed. Access to cash values through borrowing or partial surrender will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.
Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual is headquartered in Springfield, Massachusetts and its major affiliates include: Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MassMutual International LLC; MML Investors Services, Inc., member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust Company, FSB.