Avoiding Surprises

Avoiding surprises. First, let me make it clear surprises cannot be totally avoided. Otherwise there would not be any surprises.

But every so often we have terrible situations occur that are absolutely avoidable.

I often counsel families and individuals faced with serious financial issues that should never occur. And the common theme leading to these disasters is power, greed and lack of goals.

The greatest enabler to disaster is the individual who lacks the mental strength to challenge a marriage partner or significant other regarding finances. Common circumstances for this are the need for a sense of “security” and a willingness to trust the “partner” to the point of ignoring the obvious.

For example, someone I have worked with recently has decided to split from their spouse after months of “hanging on” to what was an impossible situation.

One makes about 75k a year and the other about 40k. The lesser income is certainly enough to be independent, but that person was being abused and unable to make the split. They just needed the assurance of the extra income.

Finally the courage came to move on with life separately. But when questioned about finances, this person did not have a clue about any accounts other than their own 401k and their joint checking account.

The person with the lower income placed their earnings into the checking account, bills were paid and any money remaining the end of the month went to a joint savings account. My client now finds out the savings account is not joint. The client has never seen any statements regarding the “joint savings”, partner 401k, and absolutely no idea of where the partners’ income was going.

The point is this: If you are in a relationship with someone, make sure you have regular meetings about “family unit” finances. Maintain a spread sheet summarizing account numbers, account registration and the balance of each account. This means all financial accounts including credit cards, balances on loans for the home or vehicle and a list of assets that have no debt attached. Review the monthly, quarterly or annual statements for any changes. Failure to share information should ring all kinds of alarm bells.

Doing the above will keep all parties informed, simplify decisions and help with other actions when disaster hits. Death, illness, divorce, and separation cannot be avoided. But preparation will minimize the financial agony associated with each.

If you have questions about this article or have ideas for future topics, please contact him @ 575-9395. The author has 20 years financial counseling experience and has helped countless families build wealth. If you have questions about this article or have ideas for future topics, please contact him @ 575-9395.