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Updated on Wednesday, February 18, 2015
It’s the kind of tale that’s used as urban legend among middle-aged women who rely on a husband’s salary for financial stability. Husband comes home and tells wife he wants a divorce. Wife is blindsided and without an income stream of her own. Wife and husband go through divorce proceedings and husband has hidden money from her so she’s unable to receive her legal share of the couple’s joint assets.
I found this clichéd tale hard to believe, until it happened to a friend’s mother.
Her husband asked for a divorce after he’d funneled a significant amount of money out of the couple’s bank accounts, but claimed financial hardship as the reason the couple’s finances took a major hit right before the divorce proceedings began. My friend’s mother had left the workforce three decades prior to be the primary caregiver and had no skill set to successfully return to work and earn an income remotely close to the upper-middle class lifestyle to which she had become accustomed.
As details of the divorce slowly unfolded, one thought kept bouncing around my head – how could she not have noticed the money being siphoned out of bank accounts?
Unfortunately, this tale is all-too-common for both women and men who give up a career to become a primary caregiver to children and then become complacent about handling the finances.
Just because your spouse brings home the bacon doesn’t mean you have to sacrifice your right to understand the ins-and-outs of the family finances. Stay-at-home parents do contribute financially by being the caregiver, cook, teacher, personal driver, housekeeper and even therapist. In fact, Salary.com estimated a stay-at-home parent juggles 96.5 hours of work each week and should be earning $118,905 a year.
Some couples may elect to keep finances separate after getting married. There is nothing wrong with determining that separate bank accounts are better for your relationship, but there is a problem if the deal lacks transparency. Couples should still be able to see how much is available in each other’s accounts, agree on how incomes should be allocated to reach financial goals, and certainly be red flagged if thousands or tens-of-thousands suddenly leave an account.
Red Flags Money is Being Hidden or Misused
- He or She Won’t Share Details – Maybe your spouse is a financial advisor so he or she handles all things money related. That’s fine, but you should still be kept in the loop. If he or she is reluctant to share the family’s financial situation (or a personal one) with you, that’s a big red flag.
- Mail from an Unknown Financial Institution – If you bank with Chase, but statements start coming in the mail from Wells Fargo, then you should check in with a spouse. There could be a perfectly reasonable explanation, but it’s best you know where all the family money is being kept.
- You Don’t Know How to Track Down Family Assets – It’s often common for one spouse to have a larger hand in handling the family finances, but what if that spouse died tomorrow? Do you know not only where but how to access investments, retirement savings, life insurance, checking accounts and savings accounts?
Ensure You Won’t Be Financially Blindsided By a Spouse
- Be Transparent – Have access to the family finances. Understand the monthly bills and how much is the norm for your family to have in the bank, savings, investments and other funds.
- Do Regular Checkups – Whether it’s with or without your spouse, each partner should be routinely checking in on the family finances to make sure bills are being paid and there are no surprises in the amounts reflected in accounts.
- Pull Credit Reports – Share credit reports with each other. This won’t show what’s in the bank (or even what bank accounts are open – that’s through ChexSystems) but it will show all lines of credit including: credit cards, mortgages, personal loans and car loans.
- Communicate – Don’t be intimidated by asking about the family finances. Just because you’ve spent 15 years of marriage never asking, doesn’t mean you should go another day without understanding the overall money picture.