“Can’t I just leave all this money stuff to my husband,” K. asked, half sheepishly, half seriously.
“Umm, no you can’t,” I replied, wiping the sweat off my face. “What if something happens and your husband can’t take care of things? What are you going to do?”
K felt uncomfortable and probably a little bit defensive. Fidgeting with her sneakers, K didn’t quite know what to answer.
A few women chimed in and the conversation got intense. Each one had a story to tell of a mom or an aunt or a friend who suddenly found herself in charge of the money. With no clue what to do about it.
Coping with the searing pain of the loss of a partner or the discovery that your spouse has a debilitating illness, is challenging enough. Having to learn to manage the family finances on top of everything else can be utterly terrifying.
In this article, I’m going to discuss three reasons why you shouldn’t let your partner manage all of your finances.
But first, let me share a little background.
Traditionally, responsibility for managing the family finances fell on the husband. The wife may have known where to shop for the cheapest laundry detergent and toothpaste. And she could probably stretch a pound of beef to feed a family of six (for two nights). But managing the long-term money, like investing, retirement planning and insurance – that’s the man’s job.
Men do taxes; women go shopping.
In my family, my grandfather watched the business news while my grandmother whipped up delicacies in the kitchen. And this dynamic likely repeated itself in many households around the globe.
Our moms and grandmas didn’t manage money, so women today lack financially savvy female role models.
Now let’s add to that the image portrayed in advertising and the media of the smart banker in his sharp suit sitting behind his cold, intimidating mahogany desk. Is it any wonder that women feel like money and banking is not their thing?
Managing money feels uncomfortable and intimidating. It’s not in our wheelhouse.
But here’s the thing. Women today are better educated and hold more executive and professional positions than ever before. Intellectually, we are more-than-capable of managing money and building wealth. It’s time for us to step up and step into the role of financial managers for our households.
Against that background, let’s dive into those three reasons why you shouldn’t let your partner manage all of your finances.
You’ll never know if he’s doing a good job.
Based on tradition and conditioning, we believe that taking care of the family finances is the man’s responsibility. And for some reason, we think that men know what they’re doing.
But in reality, most of us never learned about money management when we were growing up. Our parents didn’t discuss investing and financial planning with us. Financial responsibility wasn’t part of our formal education. Stocks and bonds; risk and return. I never learned about those things studying for a B.A. in Economics. And they certainly weren’t on the curriculum for my husband’s science degree.
A few lucky kids learned about investing from parents who explained it to them from a young age and encouraged them to open their first investment accounts. I’ve met some folks like that. But most of us, men and women alike, are muddling through and figuring it out as we go along.
So it makes no sense to believe that the husband understands more than the wife about investing money and growing wealth.
But in order to figure out if our partners are doing a halfway decent job of managing the family money, we need to know enough to carry on a thoughtful and intelligent conversation.
I’m not (necessarily) suggesting that women take on and take over the management of the family finances. I am encouraging women to be curious, to ask questions and to become partners in the family money conversation.
When partners share responsibility and they stay on top of their finances together, everybody benefits. They reduce financial stress and increase money confidence. They envision a joint future where money is a tool to help them reach their goals. They increase financial transparency and reduce suspicion. They dissolve fear and increase love.
And in addition to all that, the data show that women are better and more successful investors than men. So what are you waiting for? It’s about time women got involved in the family finances!
You’ll never know if your broker or investment manager is doing a good job
If you work with a financial advisor, an investment manager or broker to manage your money, you’ll want to know if he’s doing a good job. But how will you assess that?
Do you understand the risks your portfolio manager is taking with your investments and how that impacts the return you earn? Is not losing money a good enough goal for you?
At the end of every month, quarter and year, your financial advisor will probably send you a financial report. You’ll see a lot of numbers and maybe a pretty graph. The report might include a paragraph or two that lets you know what went on in the financial markets.
Take ten or fifteen minutes to examine the reports for your money. Ask your advisor about the various investments. Find out if you own stocks and bonds, in various countries, in different currencies, in different industries. What are the tax implications of your portfolio structure?
Get curious. It’s safe to ask questions. This is your money. You’ve hired an advisor to serve you.
Related read: 6 Things Your Financial Advisor Might Not Tell You
In addition, clarify whether or not your investment advisor has a fiduciary responsibility to manage your money in your best interest. Know how he gets paid.
When you hand over your wealth to be managed by a third party, you need to understand the professional relationship between you. Sometimes, professionals get paid in a way that causes a conflict of interest. I learned that the hard way many years ago when I discovered that our portfolio manager was churning our account – buying and selling excessively to generate trading commissions.
Not everyone has the inclination or the time to manage their own investment portfolios. I get that. But when you hire someone to perform that service for you, some knowledge and understanding of the financial industry enables you to ask intelligent questions – and get intelligent answers.
- Six Money Muscles Every Woman Over 40 Must Develop
- Ladies First and How to Take Care of Your Finances First Ladies
- Women, Wisdom and Wealth: When Women Manage Money on their Own
Women need to know how to manage money on their own
Life happens. Usually, when it’s least expected. When a woman suddenly finds herself managing money on her own – because her husband is sick, disabled, incapacitated, he’s passed away, or she’s divorced – it can be really, really scary. The insecurity and fear of not having enough money are raw and terrifying. No woman should ever have to experience those feelings.
And let’s face reality: most women will have to manage money on their own at some point in their lifetime. Statistics tell us that 80% of women die single, due to divorce, never marrying or because we outlive our partners.
Take precautionary, proactive steps to learn about investing and money management. Knowledge and understanding increase your financial confidence.
You don’t need to be a mathematician or even good with numbers. You don’t need to follow politics or understand global economic trends. You should learn some basic investing terms to help you swim comfortably in financial waters. An open mind and a dose of curiosity are wonderful assets. With these in your pocket, you will do just fine.
Summing it all up
In this article, I discussed three reasons why you shouldn’t let your partner manage all of your finances. Make it a priority to join the financial conversation, to take care of your money and to take care of your financial future.
Become a financial partner with your spouse.
Because nobody cares about your money more than you do.