Discover the top financial missteps women often make in marriage.
Every marriage has its own financial dynamic. Some couples keep their finances completely separate, while others combine everything from the get-go. In some cases, one partner handles all the financial responsibilities, leaving the other in the dark about important matters like bills, investments, and debt. Others try to balance responsibilities equally.
While all these arrangements can function well, some can place one partner in a vulnerable position. As a divorce attorney, I've guided many clients through the challenges stemming from these unequal financial practices. My recommendation? Don't wait for issues to arise; assess your financial situation regularly to safeguard your future.
Here are five prevalent financial errors women make in marriage, each of which can be easily remedied.
Your Money Is All Joint
The classic question: Should you pool your finances with your spouse or keep them separate? Both approaches can be viable, but it's wise to maintain a separate account for personal spending. This way, you can buy gifts or indulge without touching the shared funds you both contributed to.
However, merging assets can lead to complications. If you owned property or received an inheritance before your marriage, combining these assets can expose you to risk should your marriage end. Placing those assets into joint accounts can turn what was once your separate property into shared marital property, making it subject to division during a divorce.
Solution: Keep any premarital assets, gifts, or inheritances in your name unless there are pressing reasons to merge them.
You Lack Individual Credit
Most people have credit cards, but not everyone considers whose credit is tied to them. If your cards are solely based on your spouse's credit and you're just an authorized user, they won't help you build your own credit history. If circumstances change, such as a divorce or loss, those cards could disappear, leaving you unprotected.
Solution: Every woman, whether married or single, should have credit cards in her own name. If you're denied due to insufficient credit history, check your credit report (available for free annually) and learn how to establish credit using bank accounts, utilities, and responsible use of credit cards.
You Depend on Your Spouse's Future Inheritance
If your spouse is set to inherit significant wealth, it might be tempting to rely on that for retirement planning. However, counting on an inheritance is risky. Estate plans can change, assets can diminish due to unforeseen circumstances, and investments might lose value.
Solution: Start saving for your retirement now. Don't wait.
All Debt Is Under Your Name
Sometimes, one partner has better credit and ends up owning all the credit accounts, or all charges are placed on that person's card for rewards. If significant debt accumulates this way, it can create accountability issues; if payments are missed, you bear the brunt of the debt alone.
Solution: Ideally, pay off credit cards monthly. If you need to carry a balance, distribute it evenly between you and your spouse to share responsibility.
You're Unfamiliar with Household Finances
If you're out of the loop regarding household finances, you're putting yourself in a precarious position. Should you find yourself separated for any reason, you might struggle to manage bills without essential financial information.
Understand your household expenses, your spouse's income, available retirement benefits, investments, and debt. Being informed empowers you.
Solution: Hold regular financial discussions with your spouse. Review your financial status together and ask questions about joint tax returns before signing them to grasp your financial landscape.
