Thursday, July 12, 2012

Is your Wife Aware of Your Financial Status?


That is a stupid question, don’t you think so? I know you are mumbling, oh sure my wife knows about my financial status. After all, she is my wife…

Well my friend, I am not talking about your overall financial status as in whether you are rich, poor, in trouble etc. I am talking about certain details which I am sure your better half doesn’t know about you. Did I catch you by surprise??? Read on to find more!!!

Why this Article?

I was talking to a good friend of mine, a couple of days back when he was telling me something that hit me hard on the head. His colleague’s husband had met with an accident and was hospitalized. The poor lady (I am going to call her Mrs. X) did not know how much money her husband had in his account. Even worse was the fact that, she did not know what investments he had made or what his ATM PIN number was. The hospital was demanding a hefty sum for the treatment and even though the couple was well off financially, she was not in a comfortable position to handle the situation. All she could say ways

My Husband handled all financial matters.


Like most families, Mrs. X too entrusted the responsibility of running the home’s finances to her husband and she concentrated on the more difficult task of running the family.

Well, Mrs. X somehow managed to borrow funds from her relatives and finished her husband’s treatment. Thankfully he recovered within weeks and they were able to repay all the money they borrowed in one shot because, her husband had saved up some money as Fixed Deposits for a rainy day. The day came but he never told his wife that he has saved up for a rainy day. So, she was left to suffer all alone, trying to come up with money for her husband’s medical treatment.

Imagine how good it would’ve been if she knew that he had fixed deposits that could easily cover for his medical expenses? She could’ve happily close those and paid for her husband’s treatment instead of having to borrow from friends or relatives. Imagine the mental agony she could’ve been spared, had she known it?

Now, get the picture???

What must we share with our Better Half?

A lot of women are not so good at dealing with finances (Or so they think) and so entrust the responsibility to the men in their lives. All this is well and good. But, they must ensure that they are aware of the investments that their husband is making so that they are not caught by surprise like Mrs. X was.

Men & Women Both of you can keep a common notebook or a journal where you write down the following details so that, either of you are aware of the financial status of one another and can take decisions at times of crisis.

1. Property Held – This is something 99% of couples know because if a husband is buying a property, there is no way the wife doesn’t know it. But, for the 1% this was a surprise kind of husbands, it would still be a good idea to note down the details somewhere so that the wife can know when she needs to
2. Bank Accounts – Note down your bank account numbers, fixed deposit account numbers along with amounts invested etc. Don’t write down PIN Numbers but make sure your wife/husband knows what your PIN is
3. Credit Cards – Note down the list of all your credit card numbers along with the name of the bank that issued it.
4. Stock Market Investments – Note down your DEMAT account number and atleast the total value of your investments in your account. If you can maintain the nitty-gritty kind of details reg. each of your investments in the DEMAT account, that would be even better
5. Your Employee Provident Fund account information (If you work as a salaried employee for some company)
6. Your Public Provident Fund account information (If you have one)
7. Your National Savings Certificate information (If you have invested in them)
8. Any other loan amounts that you have lent to your friends or family members with details of when and how much along with when they are expected to repay them.
9. Details of Gold and other Jewelry you may own (This point is applicable in 99% cases for women because men usually don’t take care of handling jewelry or gold. It is usually the lady of the house who takes care of it. So, add this entry if this is applicable for you)
10. Details of your Insurance Policies, their numbers along with details like the maturity amount, surrender value etc (If you know them). As a bare minimum noting down which company issued your policy, the agent who sold you the policy and the policy number is required for our family member to use it if they need to.
11. Details of your liabilities – Note down the loans and amounts you have borrowed from others including the amount you owe in return, when you borrowed it, the amount borrowed, borrowing individual/institution etc. The last thing we need is some lender harassing our family members after we are gone on money we owe them. If we owe them money, the responsibility to repay falls on our family members. But, at least if they know how much we owe and to whom, they can plan accordingly and refute claims from bogus individuals about money you owe them.

The list above is not exhaustive. For this week, try to remember all relevant information reg. your investment’s/assets/liabilities/insurance etc and write them down. Going forward, whenever you take any monetary decision, make sure you update the notebook so that you don’t have to spend time recollecting what you did…

It would be a good idea to include our life partner as a joint holder of all your accounts so that they can easily operate our accounts in our absence without much legal hassles.

Some Additional Things You Need To Do


Apart from writing down all this information, you need to do some additional things. They are:
a. If you have selected e-mail statements for your bank accounts/credit cards/DEMAT etc, make sure your life partner knows the password to access that mail account
b. All bank accounts/credit cards/DEMAT/Investments etc accept Nomination facilities when you open them. You can also update the Nominee details anytime you want. So, make sure that you update your wife/husband’s name as the Nominee in all your accounts.
c. Write a detailed WILL outlining what you wish to do with your assets after your life. This is something people don’t think of until they reach their 60’s or maybe even later. But, it is always a good idea to have your will created early. Another important thing is to re-assess your WILL once every 3-5 years to include details of new assets that you may acquire during the period or to add/remove people you may have included/missed in the previous version of your WILL.
d. Write down the contact details of important people so that our life partner can find them in one place easily. Some of these people could include:
a. Financial Advisor
b. Insurance Agent
c. Chartered Accountant
d. Doctor
e. Etc


Last but not least, make sure you leave all the relevant artifacts in a safe place and make it known to your life partner…

Some Last Words:
The whole idea behind this exercise is to make sure our life partner can handle everything even after our time. Think of the state Mrs. X was in when her husband met with an accident and she couldn’t arrange cash to pay for his medical treatment and then ask yourself this question, do I want my wife to go through this trauma in case anything happens to me? The idea or reason as to why I am asking you to do this will become clear and you will do it without any issues or hesitation…

Happy financial planning.

2 comments:

  1. This is the 2nd article I am reading on similar lines in past 2-3 days. Not sure how to do the WILL part; other details can be taken care easily though.

    So can any specific people (like document writers) who can write the will or is it only lawyers?

    ReplyDelete
    Replies
    1. Rajesh - A Will can be done by ourselves or using a Lawyer. I will probably write up something about how to create a WILL very soon.

      Anand

      Delete

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