Are you doing more harm than good when it comes to the family finances?

Who manages the financial affairs in your household? Could you manage the money if the unforeseen occurred tomorrow?

In many households, there inevitably tends to be one person who manages the home’s finances. I see this in my work as a financial adviser; couples sit in meetings with one person engaged in conversation, whilst the other stares blankly into space.

Money and finance isn’t everyone’s cup of tea (ask my wife!). Some find trawling bank statements and tracking expenses laborious and, at times, confronting. Many couples find it easier for one person to deal with the money, rather than each paying different bills and monitoring cash flow. Whilst this arrangement may sound fine in theory, there are issues that may present themselves down the track.

Recently, a female client sadly lost her husband to cancer. In her grief, the last thing she thought she’d be dealing with was money. Until this point she had left the task of managing money entirely to her husband. When she received the bill from the funeral home, she had no idea where to find the money. Their cash was held in an account in her husband’s name which was frozen upon his death and funds held in super wouldn’t be released for some time.  There was so much to-ing and fro-ing until, in the end, she had to borrow the money from one of her children. Not a good situation.

How could situations such as this be avoided? Firstly, both partners need to have a basic knowledge of what’s what with bank accounts and investments. The CFO of the household should compile a simple list naming all bank accounts, product providers, investments and service providers. Keep it somewhere safe and where both of you are aware of its location. Once every couple of months you should review the list together to confirm understanding. Secondly, maintaining a joint account with the bulk of the money would mean the account would still operate in the event of one partner’s death or disablement.

You may think you’re doing your other half a favour by not involving them in the financial affairs, but you could actually be doing more harm than good. Should the unforeseen occur, they may be ill equipped to manage financially without you. Put some time aside to compile that list and sit down to discuss these important matters, so you’re on the same page.

Information provided is general in nature and does not constitute financial advice. Before making any decision based on this information, you should assess your own circumstances or seek advice from a financial adviser.

Who looks after the finances in your family?  Tell us in the comments below…