5 things women should consider before updating their relationship status
What women want to ask their financial advisors, but rarely do
By Lindsay Sparrow 21 January 2020 6 min read
As a female advisor that caters to women’s unique investment needs, there are some blush-worthy questions that women ask their advisor, but only when they are really comfortable. These are the financial questions that women would be most likely to google, when no one is looking. Searching for advice on how to set up their finances when someone new is entering the picture. These hard-to-ask questions are often asked right before becoming “Facebook official”. It’s smart for women to protect their wealth as 38% of marriages in Canada don’t end up in forever after.
Zsa Zsa Gabor once quipped, “you never really know a man until you have divorced him”. While we all strive for a happily-ever-after scenario, financial confidence isn’t just about understanding the numbers; it’s also about understanding your options and acknowledging that relationships sometimes end. This article is relevant for any kind of relationship, with the goal of encouraging thought and discussion in an effort to help couples protect themselves financially and legally for the “what if” scenarios.
It’s vital that women have a strong sense of their finances and know that there is a suite of legal options to help protect them financially. It’s critical for women to continue to educate themselves on unique hurdles women face, such as potential financial setbacks caused by unanticipated life changes and other challenges related to the Gender Wealth Gap.
Money can still be a taboo topic, which can hold women back from asking their professional advisors the most critical questions. First, there is no question too uncomfortable to ask your advisor. Your professional advisors are being paid to help you make the tough, emotionally-charged financial decisions. Second, when you consider the questions I’ve shared below, think about what feels right for you and not what your friends or family might be doing. Everyone has their own set of circumstances, and matters of the heart are extremely personal.
1. Should I have a joint bank account?
To be, or not to be joint? This can be a tricky area for couples to navigate as their lives begin to merge. The bank account debate can be a sensitive subject matter depending on the individual. Be prepared for unsolicited feedback, as people are quick to offer their outside opinion on this hot topic. Ultimately, it comes back to what makes YOU most comfortable, it’s about setting up an arrangement that works best within YOUR relationship.
There is a common misconception that having a separate bank account will protect you if the relationship breaks down. In reality, divorce lawyers, also known as family law lawyers, may advise that regardless of whether or not money is held in an individual account, it will likely be considered a joint asset. If there is no prenuptial agreement or marriage contract in place, then assets and debts accrued while married (and yes, this includes common-law relationships) will generally be split equally.
A Good Option: If a joint bank account is right for you, but you and your partner still want to access some individual cash, consider having a joint bank account for joint expenses (mortgage, household costs, other obligations, savings and investing), and individual bank accounts for individual debts and discretionary spending. Couples often find that a fair contribution to the joint account can be determined by using a percentage of what each spouse is earning compared to the other spouse.
2. If my partner manages the finances and I trust them, how involved do I need to be?
When women are not involved in their household finances, it can make separation or divorce that much more difficult and painful. At a time of heightened emotions, women don’t need to be adding the burden of turning their house upside down looking for bank and investment statements or trying to quickly become educated on the household’s finances.
If women are involved in the day-to-day financial decisions, they will have less worry that something was hidden from them, or being blindsided by existing debt. By being involved, women will achieve a greater sense of security within the relationship. If separation or a divorce occurs, they will understand their financial picture and feel better equipped to plan for life after marriage.
3. Should I have a rainy day relationship fund?
Women often ask whether they should set aside money in case they run into relationship trouble. This is a personal choice and there are a variety of reasons why women may feel this is the right choice for them.
Do what makes you comfortable. If you’re the type of person that likes to be prepared for any scenario, then creating a rainy day relationship fund might make you feel more at ease. Some people choose to disclose this choice to their partners, and some will not. It’s a personal choice, and yours to make.
4. Should I get a prenuptial agreement or what we call a marriage contract in Canada?
Millennials are making prenuptial agreements more common, for a variety of reasons. Typically, people are waiting until later in life to get married or live common-law, so there’s a greater likelihood that assets have been accumulated prior to the relationship.
Divorce lawyers may recommend that a prenuptial agreement is the best way to clearly outline what each person had prior to the relationship becoming joint from a legal perspective.
5. Should I be nervous about raising the conversation about prenups with my partner?
It might seem like asking for a prenuptial agreement could lead to fighting or heartache, or going through the process may be a buzzkill before you get married. However, the experience of working through a prenup can result in healthy, open conversations about money within the relationship long-term, not to mention the peace of mind each partner can gain through the process.
A Good Option: Are you already married, or have common-law status? If you missed the prenuptial boat, don’t worry! You can consider a postnuptial agreement, which is a written agreement executed after a couple is married or have entered into a civil union.
The Bottom Line
The bottom line advice I give to my female clients is this: You need to know what’s happening with your money. It’s not always easy, but it will make your life infinitely easier if the unanticipated occurs.
Initiate conversations with your partner and be involved in your finances. Be sure to join the meetings with your financial advisor, accountant and lawyer.
Be willing to ask the difficult questions.
Have online passwords so that you can access your accounts at any time.
Understand what life would look like from a financial perspective in the case of a marriage or relationship breakdown.
Full disclosure, I’m not a lawyer, and I always recommend that women secure legal counsel to fully understand their legal financial obligations and how best to legally protect themselves.
Remember, what’s right for one couple might not be the best path for another. No matter your circumstances, it’s best to start getting comfortable talking about money and finances as a couple as soon as possible. Studies show that couples who spend more time talking about money build greater wealth than those who don’t.
ATB Wealth consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc., ATB Securities Inc., and ATB Insurance Advisors Inc. are individually licensed users of the registered trade name ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.