Both spouses need to follow family funds

People sometimes quip that ``what you don't know can't hurt you.'' But in the area of family finances, nothing can be further from the truth. Take the case of one couple who separated but never divorced. The wife moved overseas. After her husband passed on, she came back to the United States virtually penniless. But because he had failed to change the insurance beneficiary, she ended up receiving almost $300,000, which she wasn't expecting.

A more common occurrence arises when a husband passes on, leaving a wife and children. One woman in this situation told her financial planner, Lewis Wallensky, that her husband ``never trained me to cope with this.'' She had to start from scratch, taking courses to learn about finances, says Mr. Wallensky, of Century City, Calif.

``No matter how traditional a marriage is, joint financial planning is important,'' he says. ``A woman doesn't have to know everything about finances, but she should have a speaking knowledge.''

In more cases than not, the wife is the spouse who does not know about the family's finances. Many women, particularly those middle-aged spouses who have never worked, have no experience in handling money and making decisions. Increasingly, divorced women who are heading households are seeking financial guidance.

A traditional marriage - in which the husband controls the checkbook and makes the big financial decisions - does not make sense if it keeps the wife uninformed, says planner Anned Muse, of Planning Concepts in Houston.

``Statistically the wife is going to outlive the husband. The wife ultimately has to make the financial decisions, but she is not prepared,'' she says.

Another reason a wife should know the family's finances is to protect herself from unscrupulous people, says Robert J. Oberst, a financial planner in Redbank, N.J. ``If a woman has no knowledge of where the money is, and she becomes a widow, she can become a candidate for every con merchant,'' he points out.

More important, perhaps, is the fact that if the wife doesn't know about the family's finances, ``there's a good likelihood nobody else knows, either,'' says Ben Turner, a planner in Houston.

Yet by the time people get to a financial planner, 99 percent of the families haven't discussed money, Ms. Muse has found. ``We ask for a statistical profile, and we ask the same questions of a couple, and we never get the same answer,'' she says.

``Money is a responsibility: You have to look after it whether you inherit it or make it,'' she adds. ``You just need to deal with it, and get on. Until you've managed it for yourself, you don't understand.''

Wallensky urges spouses to talk to each other about finances, because he believes that ``money is a manifestation of the problems that exist between couples. People talk about every other aspect of their lives, but so many couples don't know about their finances.''

He believes the ``weaker'' spouse in the couple, that is, the person with the lesser financial knowledge, should handle the checkbook, ``because that person gets involved and is forced to learn. He or she will ask questions,'' Wallensky says.

Dr. Oberst, who has a PhD in financial management, says families should sit down and have financial meetings. Both spouses should be able to track the money coming in and going out. A basic budget includes fixed expenses and discretionary expenses.

``The mortgages and car payment cannot be avoided,'' Oberst notes. ``The discretionary items - the vacation and television - are things we can live without, but like to have.''

Money management ``is nothing more than learning how to make your money work for you,'' Oberst says. For example, couples should not keep a lot of money in a checking account: Keep the surplus in an interest-bearing account, such as a money market fund, he advises.

In addition, the spouse handling the day-to-day expenses needs to think about how much cash is needed on hand. Anything else should be invested, for example in growth mutual funds, particularly in a low-interest-rate environment.

Mr. Turner, who is a lawyer specializing in tax planning, encourages families to keep the checkbook balanced and maintain good records. One ready source of information is the yearly tax return. ``The whole financial situation involves knowing where to go for help,'' he says, adding that reputable sources include a family's accountant, lawyer, insurance agent, or financial planner.

Wallensky says a homemaker should know about the husband's corporate benefits and insurance. For example, ``When you get the health insurance packet from the employer, both spouses should sit down and go over it. There are many options to choose from,'' he points out.

The level of financial education for women is rising. For one reason, as women are contributing more to family incomes, they are more interested in making the decisions, says Muse. ``It's their money, too,'' she notes. Younger couples are more attuned to joint financial responsibility, as well.

Oberst observes an increasing number of women taking on responsibility for the checkbook and money management; indeed, in the finance courses he teaches, women outnumber the men.

``The move toward independence, the whole women's movement, has forced women and men to take part in decisions they weren't involved in before,'' Oberst says. ``There's no reason women shouldn't know as much as men.''