Managing a household is challenging enough without having a time bomb in your basement. You ignore it as best you can, but it’s probably causing both of you some tossing and turning in the wee hours of the night. What are we talking about? It’s the risks your family faces if only one of you is the sole “boss” of the household finances.

Just as most thriving businesses have a Chief Financial Officer, most families have a household CFO. They’re the one who is in charge of paying the bills, filing taxes, making the big-ticket spending calls, and investing whatever’s left.

Is that you, or your spouse/partner? In most of the households we meet with, one of you has taken on most or all of the CFO duties. From one day to the next, that may not be a problem. But what if the non-CFO partner is unexpectedly left in charge? If they don’t at least know the basics, it could blow the lid off their personal and financial well-being. And that challenge doubles for every dependent child involved.

Tick. Tick. Tick.

“It’s Working Well So Far”

How does the family CFO role get assigned? Sometimes, it’s because one of you has more experience and/or interest in money matters. Other times, it’s just how decisions were made early in the relationship. Habits formed … and it’s remained that way ever since.

As long as the relationship remains healthy and strong, fine. Your arrangements may even yield day-to-day efficiencies. But delegating household financial matters to just one person can lead to bigger issues over time, as this academic study describes.

don't have a ticking time bomb in your life

Bottom line, the household CFO has more opportunities to expand their financial knowledge, while their partner applies themselves to other household responsibilities. Over time, this knowledge gap grows and grows. What if a death, disability or divorce occurs? If the “other,” unprepared spouse finds themselves suddenly in charge of their own or the household’s financial management – boom.

Defusing the Financial Fallout

Just as it’s critical to build and maintain your home on solid ground, we suggest building and maintaining your family’s strong financial foundation, to achieve your greatest lifelong goals. For this, it’s important that both of you are at least a little involved, no matter which of you serves as the household CFO.

We recommend you both remain familiar with the following essentials, including what exists for each, and how you would go about finding the necessary paperwork for:

1.    Banking and investment accounts

2.    Company retirement plans (with current and former employers)

3.    Outstanding debt (including mortgages, college loans, credit cards, etc.)

4.    Tax-related essentials (past returns, current forms and statements, etc.)

5.    Estate planning documents (wills, trusts, advance directives or “living wills”)

6.    Insurance policies (home, auto, life, medical, long-term care)

In addition to knowing what you have, it’s important to know who you can reach out to for help. Who are your trusted professionals, such as your wealth manager, CPA, estate planning attorney and insurance agents? What is their contact information? Have you ever met them?

Time for a Family Financial Audit?

To bring (or keep) both of you up to speed, we would suggest sitting down together occasionally to review all things financial. Think of it as a stress-reliever. Even if you never need to know, it’s comforting to be informed and educated about your money, just in case. And if either of you ever do end up on your own, it will be too late to prepare for it after the fact.

In short, essential financial know-how builds confidence. At Cogent Strategic Wealth, we help families fill the gaps in their financial literacy so, come what may, they can co-manage their household wealth as effectively as a successful business runs its financial operations. 

We all know friends and family who have faced devastating life changes when one spouse becomes incapacitated or dies. From what we’ve seen, it can soften the blow considerably if you have a fee-only fiduciary financial advisor turn to as your guide through tumultuous times.

At Cogent Strategic Wealth, we are honored to play this role when called upon. We help bring order to your financial house. We ensure you have the information you need to make smart financial decisions. Arming both of you with resources for making informed choices if the going gets tough, we’ll help you take the necessary steps to prepare for life’s most challenging transitions.

So, let’s turn off that troublesome time bomb:

1.    Schedule a FREE 30-minute call with one of our wealth advisors. We’ll learn what success looks like for you, explore your financial situation, and answer your questions about us.

2.    Online or in our Chicago office, meet with our Cogent advisor team to chart a course toward your financial goals.

3.    Partner with us to follow your tailored plan as we monitor and adjust it, to ensure you are always pointed towards your goals.

We hope you’ll set up that call with us today (both of you!) to start transforming your hard work into a secure future for your entire household.