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Financial Planning

Family Finances Are a Joint Project

Make sure you have access to key accounts, and keep things as simple as possible.

My column on sharing passwords and other key financial information with your spouse struck a chord with a number of readers—myself included (more on that later). "Your article sparked some cleanup activity for my wife and me," writes Dale Tennison. "We went to work to document everything, in­cluding automatic payments and withdrawals." They also made sure that family members know how to access the information.

Other readers wrote about their personal wake-up calls. "Our credit cards were compromised several times, and that was the incentive for us to organize our records so that changing credit card auto-payments could be done easily and quickly," writes one reader. She and her husband later expanded the list to include information about life insurance, pensions and financial accounts. For reader Craig Carlson, the catalyst was helping his elderly mother manage the paperwork after his father passed away. Carlson says that prompted him to "start a checklist for my wife."

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My friend Teri, one of the savviest money managers I know, took charge of her family's finances when she married later in life and became part of a blended family. When she was planning to retire, she says, "I got serious about knowing the balances in all of our accounts." She keeps a spreadsheet of all those accounts (including passwords), which she updates quarterly. "I tell my husband he's not allowed to change any passwords without telling me," she says.

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Readers have adopted various strategies for safeguarding their information. "We keep a paper copy under lock and key and another encrypted on my laptop," says one. "I don't trust security in the cloud," writes another, "so I keep my information in a file on a USB flash drive. All my wife needs to do is look for that file, and (hopefully) she'll find everything she needs."

Streamline your system. In addition to sharing information, it's also critical to keep things as simple as possible. A friend of mine recently lost her husband after a long battle with ALS. She is a professional woman with a law degree, and she and her husband had worked with a financial adviser. But her husband had made their financial arrangements so complex that she confessed she "only understood about 30%" of what he had done. Now she has to deal with 100% of the consequences.

To avoid complexity, the Tennisons have consolidated a number of accounts with a single financial institution because "there's less to document and communicate." And Teri and her husband have cut back to one joint credit card. Readers also stress the importance of making sure both spouses have access to joint accounts, as well as keeping track of beneficiaries, which Teri includes in her quarterly financial statements.

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And that's where I come in. After writing my column, I sat down with my husband to review our own finances. I realized, to my shock, that when I rolled over my Roth 401(k) account from work to a Roth IRA with a financial firm, I had neglected to name beneficiaries. I had assumed sub­consciously—and erroneously—that beneficiaries on my other accounts at the same firm would apply. Needless to say, I hurriedly logged on to my account to remedy this.

But that wasn't all. My husband and I live in Maryland, and tax law in the state has changed since we last updated our wills several years ago. We realized it makes sense to revisit (and possibly simplify) our designations. Now a visit to our lawyer is on our to-do list.

Keeping an eye on your finances is an ongoing process. But it can be less intimidating if you take it one step at a time and have a system that both of you understand. "Our system is far from perfect or even finished," writes one reader, "but it has given both my husband and me much greater peace of mind."

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