- The likelihood of becoming a widow for seven to ten years is very high.
- About 40% of marriages in NZ fail, but all-too-often women come out worse off after a divorce.
- Women will often face income problems if the husband is the main bread winner, and he becomes ill, has an accident, or dies. Cashflow is king. If the worst happens, the woman will have to organise replacement income and/or take over managing the money.
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.
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. Does he take big risks, or do you have lots of borrowed money? If so look at emergency money and insurances.
“Being a woman is a terribly difficult task, since it consists principally in dealing with men.” - Joseph Conrad
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.
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 three months, you can see how you are progressing (or not).
Wills & Enduring Powers of Attorney (EPA’s)
Also make notes about your wills. Do you have wills? Where are they? What is in them? Are they up-to-date?
If there is a family trust, know how the two tie together. Make sure you know who the executors and trustees are - logically someone younger than you.
Do the same for your EPA’s.
Unless your affairs are simple, get a professional to go over them all with you.
Life, major trauma, income replacement, house, contents, cars, boats, public liability, professional indemnity, and key man/woman cover. If you are in a business partnership, you should have cross-owned policies and a buy-sell agreement.
Should your home be in a family trust to protect it against unreasonable creditors? If in doubt, get advice.
Think about diversification too, as it is a great risk reducer.
Do you really need to do all of this?
If you are widowed - yes, you will need to know all of this.
Or if your marriage is crumbling - yes, you will need to know all of this. Remember, divorce is the quickest way to lose 50% of your money.
Beware of scams
If you are grieving, you might be quite vulnerable to scammers by phone or email. Be extra careful - if in doubt ask your financial adviser, lawyer, bank manager or accountant.
Loans to children
If everything is up in the air, be extra careful about any big loans to your children. Again consult your trusted advisers first.
Money grabbing, charming men
There are always plenty of scumbags who often prey on women who are lonely, and/or grieving. Be careful. They don’t always steal your money, but can be good at helping you spend it. Once it is gone, they will be too.
Always ask your advisers before parting with one cent!
The second marriage
Talk to your lawyer before you do it, and please, no rose coloured glasses.
Love is one thing, being cleaned out is quite another.
A big issue in its own, so plan for it by doing a review every year.
You should be in Kiwisaver - working or not. However, it won’t be enough, so set up another savings plan as well.
Get unbiased advice from a suitably qualified person.
Checklist for women
- Get to know all your family’s finances, inside out.
- Put all legals, such as wills etc in place.
- Make sure you have all the appropriate insurances.
- Pay serious attention to emergency money.
- Manage/minimise risk and debt.
- If you don’t understand something, get on the phone or internet and find out.
- Be careful about loans to children that might not get repaid.
- Teach all of this to your daughters before they marry.
- Don’t get burnt out - take regular breaks and sabbaticals.
- Make all the others who live with you pull their weight.
If you are a widow or live alone
- Don’t get scammed.
- Don’t get cleaned out by a predatory new boyfriend.
- Use your lawyer.
- You don’t have to do it alone. Find a mentor or guide to advise you on big and small issues.
- Find an honest man to advise you so you don’t get ripped off with house maintenance, buying/selling/maintaining cars, and appliances.
Supplied by Alan Clarke, financial & retirement adviser, & author. He also writes regular articles for the media and on line.
His second book “The Great NZ Work, Money & Retirement Puzzle” is now available.
You can buy it on line at www.acfs.co.nz
Alan is an independent authorised financial adviser (AFA) FSP26532
His disclosure statement is available on request and free of charge