I recently went backpacking on Michigan’s Isle Royale with my family. Our 18-year-old son, with the advantage of youth and fitness, usually went at a faster pace and secured prime camping spots ahead of us. My husband carried the tent and other group essentials in his pack. At camp, I started the filtering and heating of water needed for our meals. We each gravitated to roles on the trip that we enjoyed and in which we felt benefited the group.
As we hike down the path of life, each of us takes on certain responsibilities within the family. Maybe one makes the family dinners because they love the creativity of cooking, the other does all the laundry because the origami of folding clothes gives them a sense of accomplishment. Another gets satisfaction growing the family nest egg and making sure the bills are paid. Each hiker in the family is happy in their role.
Then maybe something happens. The one responsible for the family finances is unable to carry their proverbial load. It is now up to the others to figure out how to take on that load. Not only do they have to continue to carry their own responsibilities, but now, their partner’s, too. They have little idea where the money is and what they need to do to continue what their partner was doing so well. It can be overwhelming. That is why it is imperative for both partners in this hike through life to know about the family’s finances.
When monthly statements arrive, have a meeting. Make sure each partner knows where the money is and where it is going. If once a month is too much to ask, do it quarterly. Give them account passwords for online access. Have durable powers of attorney drafted authorizing access to account information. This will go a long way in helping prepare for a change in responsibility for the family finances if needed.
Also, discuss what goals each of you wants to attain with your money. Do you want that big international trip you’ve always talked about? Would you like to add an outdoor living area to enjoy your backyard? Does a family cottage sound ideal? These aspirations are fun to talk about! With each of you having a good understanding of your family’s finances, you can accurately discuss if those goals are feasible.
In addition, consider how you want to save for your goals. One partner may be more willing to take on more risk than the other. Understanding your partner’s investing style gives you an understanding of what is important to them. Having consistent conversations about how to invest your money allows each partner to feel validated.
If each of you maintains your own accounts, sit down with one another and explain what you are doing with your money. Let each other know about 401ks, savings, and other investments. Discuss your rationale for handling your money and how each of you can manage assets towards individual and common goals.
Sometimes with finances, like on a backpacking trip, you'll need a guide. Maybe you vaguely know where you want to go, like specific retirement plans, but you don’t know if what you're are doing has you on the right path or if you can actually get there at all. A financial advisor can be a guide to help you reach your financial destination, making sure you're on the right path. A financial advisor who provides a thorough financial plan lays the groundwork and provides continuity for the family’s financial future. Like in any planning, a financial plan that incorporates the family’s assets, spending habits, and financial needs is essential in making sure that you reach your financial goals. It will illustrate the “what ifs” of life that could detour you on the path to financial success.
A good financial advisor will review that plan periodically and makes adjustments to keep you on track to your financial destination. Again, the participation of both partners in review meetings is key to everyone being aware of the intricacies of reaching their goals. Additionally, a financial advisor can guide you on the often difficult path that accompanies the transition of responsibilities from one partner to the other. With a strong financial plan and the guidance of a financial advisor, the family money guru can rest assured that the family will know where to go and how to get there if he or she is no longer able to carry their load.
A teamwork approach, led by a trusted expert with a well-mapped-out plan... relax and enjoy the scenery!
Gwenn Buschell is an Investment Advisor at Exchange Capital Management. The opinions expressed in this article are her own.