Not involving your partner in financial decisions can be problematic

Managing household finances often falls to one person in a relationship. Vanguard investing expert Maria Bruno explains how not involving your partner in financial decisions can be problematic.

This webcast is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation.



Beth Orford: I might sort of throw out this next question that we got from Scott in New Mexico: “What are the pitfalls of only one person in that relationship managing all the financial affairs?” Maria, let me turn to you on this one.

Maria Bruno: I think that’s a really difficult one. Because when you think about the household then you think of a couple; whether you’re married or not, there are two individuals that really play into that household. And eventually there’s going to be a situation where one person, either if one person passes away, or if the relationship dissolves for whatever reason, that you’ll have to—

Beth Orford: Somebody simply unable to like that—

Maria Bruno: Yes or even diminished capacity.

Beth Orford: Gets ill and—

Maria Bruno: Absolutely. The reality of it is it will happen at some point. And the better you can prepare for it, just all the better you are in terms of being able to meet things short-term as well as long-term. What happens then is during these situations they become very emotionally stressful. And then you’re not only dealing with the emotional aspects of what’s happening in your life, but then also the finances. And it can really become really burdensome and too much. And what happens is decisions may be made in haste, which really are not good from the long term.

So the more that you can do today to prepare for the inevitable. You just feel a lot more comfortable. Both individuals are on the same page. And then you can just work together towards meeting your goals. Even if you handle your accounts separately at least there’s the clarity and the communication that you can work towards together. And then in the event something does happen, you know even if it’s a medical need or things like that, and that’s where I think we’ll talk a little bit around documentation and making sure that you have your medical documents in place as well because it’s not just financial that you may have to deal with.

Kahlilah Dowe:Right. And then I would also say, you know, I think it’s always good to have a second set of eyes, right, because I think there’s kind of a misconception that if someone has been doing the finances for, let’s say, 10 or 15 years and handling everything, they must be doing a great job, you know. Which is not always the case. Sometimes having that second set of eyes in terms of accountability can be a good thing.

The other thing is that I think there’s a lot to it. So when you think about putting the plan in place and the execution of it, and then tracking it to make sure it stays as it should be, that’s quite a bit for one person. And I think also one of the risks is that what a person could get kind of burned out having to do that on an on-going basis. And so I think that’s also a reason, or one of the pitfalls to having one person versus kind of splitting the responsibility.

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This webcast is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation.

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