Many people are just happy to stay out of their financial planning completely. They might be income earners, but they still rely on someone else, typically a spouse or a sibling, to make most key financial decisions.
This attitude could be a result of feeling intimidated by the financial decisions, or because they don’t feel they have the ability to get their heads around their financial matters. When they have a person whom they could entrust with this task, the choice of just getting out of the way seems reasonable.
But there are many drawbacks to this strategy. First and foremost, this situation could be unsustainable if you’d lose this person to divorce, separation or death. Suddenly, you will be left with your financials that you hardly know how they have been run. In addition, you will need to make sound decisions immediately if you’re also losing an income.
Another drawback is your distance and lack of awareness of the reasons behind some hard decisions. If you opt out of financial planning, you might step in and think they could have been managed better or differently.
Finally, you must be sure you trust this other person. Of course, it might not be the worst thing that happens in a failed marriage to see a partner being less than trustworthy with money, but it is one more additional burden that you will have to deal with.
That is why it is critical for you to be as involved as possible in your financial planning, especially if you have a variety of assets, savings and investments. The journey could begin with simple steps.
Know what’s going on
Try to get a picture of your savings, investments, assets, liabilities and debts. If you have a money manager or a wealth manager, this should be easy to obtain and explain.
Once you have this overview, ask performance questions, and try to understand why some decisions were made. Make it clear to your relatives, spouse and money manager that you’re not questioning their discretion, you only want to get a better understanding.
Take a growing role
Be more proactive in managing your financials. This change could be alarming to the person who used to do so on your behalf, so be sure to explain why. In the beginning, be more of an observer, but learn as much as possible. Ask questions and meet with the professionals who manage your money to understand their perspectives as well.
When it comes to investments, people have different perspectives on risk and returns. Make sure you try to find your own tolerance and communicate it clearly to others. Having said that, understand their perspective and educate yourself on current economic events as well as the financial markets.
Find out the paperwork
Many people, especially women, who outsource financial planning and management to their spouses struggle with paperwork when they have to take over this role. Property and investment paperwork can be overwhelming, so take your time to know where it is, go through to get familiar with its content, and finally reach out with questions to get the full picture.
Paperwork is also important when it includes titles, deeds and contracts. You will need to know where they are kept. In case of death or sour divorce, you will have to deal with many of these issues on your own without your spouse’s support and guidance.
Become proficient
While you don’t have to make decisions on every small aspect of your financial planning, you should be able to — at least you should be able to know whom to reach out to for help. Becoming proficient in financial planning includes seeking the right guidance at the right time. So before a crisis hits, make sure that you take first steps into understand and managing your finances.
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.
Get involved
Don’t opt out completely from financial planning
Gradually learn about your investments, savings and liabilities
Know the details of paperwork
Get involved in the decision making process
— R.O.
