Sunday, July 11, 2010, AM | 2 Comments
A lady friend of mine suggested to write about a married woman finances and how best she should approach it. The wife is likely to fall victim to Divorce or Death of her husband. Statistics show that about one-half of all marriages end in divorce in the United States. Nearly 80% of married women become widows and remain widows for an average of 15 years. If the husband is 40 or younger, he is three times more likely to be disabled than to die. After age 55, chances are he will be disabled for a year or more.
Yet, again survey after survey shows, few wives know much about family finances beyond routine day-to-day matters. Even many high-powered career women tend to give up a role in family investments decisions and planning. The husband mostly does it.
So in these kind of statistical conditions, what does a married woman have to do to protect herself and her surviving family financially? No woman should be ignorant about money. She should know how it is spent, where it is saved, how it is invested, how and who owns it.
- Ignorance will leave a woman vulnerable while she is married.
- Ignorance will leave a woman in serious trouble when she is no longer married.
The more a woman knows, the better off she is. It is extremely essential to know the law in your state as it applies to marriage. You must know your rights and what will happen to you in case of divorce or death.
Different states have different laws. The following are general in nature. You would be better off to check with your state what category, described below, it falls into.
There are variations from state to state but basically each spouse owns half of all the property amassed during the marriage. It does not matter who earns the money or what name is on the title. The exceptions are inherited property and gifts. Debts are also community property. For example, if the husband borrows money that he blows at a casino, half the debt goes to the wife.
In these states, a spouse doesn’t automatically own half the property. Joint ownership has to be specified when property is acquired. Otherwise, ownership rests with the title holder, who has the right to sell or mortgage the property, even if it is the family home. If the wife dies without property in her name, she has nothing to leave for the support of her aged and dependent parents.
Understand the cash flow
Create the family cash flow statement. Understand how much money is coming in and how much is going out. Make a list of total income, from salary and bonuses to dividends and interest. Track expenses including all items no matter how small in price, like newspapers and magazines.
Create a Will
If a couple makes financial decisions together, they should discuss making a will. Some couples think that if one spouse dies without a will, the surviving spouse will inherit everything. That’s not entirely true. Except for jointly-held assets, state law dictates how the money will be disbursed. Again check with your state the details of what will happen.
Talk to your husband
Talking to your husband should be interesting. Statistics show that he probably knows more than you do about your family finances. Whether based on tradition of dependence [in most families, that’s the reality] or the reality of lower wages [even though the wage gap is narrowing but still the gap does exist], a lot of women fear they will wind up destitute.
The bottom line
Knowing that you have some legal rights to your husband’s money, as he does to yours, can and should be enough instigation for you to take an active role in family finances. One way you can begin learning about your husband’s money and your own is to think of the money as a company. To do this, divide your finances into two main categories: Assets and Debts.
Make a list of all the family assets including:
- Personal property (house, car, furniture, etc.)
- Financial assets (stocks, bonds, and savings accounts).
- Real estate, business partnerships and hidden assets such as stock options, pension funds and insurance (cash and benefit value).
Indicate how each asset is owned.
Make a list of what the family owes, that is, its liability.
- Outstanding taxes.
- Loans (business and personal).
- Credit card debt and margin debt on brokerage accounts if any.
The family’s net worth is the difference between assets and liabilities.
In a Nutshell
Check whether your state is a community-property state or common-law state. More importantly, take an active role in your family finances. Know and understand where all assets are and what your liabilities are. You should be able to calculate your net worth at any instance in your married life.