The likelihood of becoming a widow for 7 to 10 years is very high.
About 40% of marriages in NZ fail, but often women come out worse off after a divorce.
If any one of these three situations arises, the woman has to organise some replacement income and /or take over managing the money.
If you never marry
If you never marry, you will not have the opportunity to enjoy a double income, and will not have the advantage of “two heads are better than one.”
Whilst you may not have the stresses and costs that marriage and children can bring, and there are plenty, you will need to be clued up about money to make financial progress in life.
Business and other financial risks
If you and your husband own a business, you should know how it works, in case one day you find yourself having to run it.
If your spouse likes to take big risks in business, or with investments that scare you, insist that some money is put into a safe place that cannot be accessed by his creditors.
If your husband has business partners, ask if they have partnership life insurance – ideally they would insure each other and that can used to pay you for your husband’s share of the business if he dies. That is instant cash, not often available otherwise. A lot better for you than being a grieving widow, and being forced to become a partner in his business.
If your husband is the driving force in your business, and he dies, what is the business worth then ? Maybe not much if the key man is gone. Hence you should probably insure him to replace the lost business value.
“Being a woman is a terribly difficult task, since it consists principally in dealing with men.” ― Joseph Conrad
Your own money
Both husband and wife should have some money put aside for their own use. Women who are at home with children may not be earning, but they are working, and they are entitled to have some financial independence.
Older women who have been predominantly home makers are the same – they may not earn, but they do work, and again their own money pool is important for them.
You should be in Kiwisaver too, working for wages or not.
Property is sometimes used as a legal term meaning any asset. If your parents leave you some money, it is separate property – not joint, and you can choose to keep it that way.
Once you put it into any joint account or your home, it becomes joint property.
Again having some of your own money might be a good thing.
Keep a simple book
You should always know what you own, what you owe, and how you will handle various risks that could wreck things. It need not be a complex task, but you should put it on paper, and update it often.
You could use a school exercise book or a computer, it does not matter which.
List all your assets and approximate values, your mortgages and debts, and any other liabilities. Add up your assets, deduct your debts, and presto, you can see what you are worth. If you do it often, say at least every 3 months, you can see how you are progressing (or not).
Wills & Enduring Powers of Attorney (EPA’s)
On another page you should make notes about your wills.
Do you have wills ? Where are they ?
Are they up to date ?
Do the same for your EPA’s.
Checklist for women
Get to know all your family’s finances inside out
Put all legals such as wills in place
Make sure you have appropriate life and other insurances
Manage risk & debt
Be careful about loans to children that might not get repaid
Tell your daughters not to have children too soon, then they are less likely to need a loan from you
Marry the right man
Don’t get burn out
Take regular breaks and sabbaticals
Make all the others who live with you pull their weight
More in part 2 next week
Supplied by Alan Clarke, financial & retirement adviser, & author. His second book is virtually complete, & he also writes regular articles for the media & on line – see www.acfs.co.nz
Alan is an independent authorised financial adviser (AFA) FSP26532 & his disclosure statement is available on request and free of charge.