“Becoming suddenly single can set your world in a tailspin, and a lack of financial planning is setting women, in particular, even further back.”
Death or divorce are two of the top five financial challenges women face, according to a report by Key Private Bank. Right next to these on the list were estate planning, investment decisions and legacy planning, according to a story from CNBC, “How to prepare for being 'suddenly single.'”
Although traditional gender roles are changing, experts say that many couples still adhere to them. Men typically oversee the finances. But the average age of widowhood is 59, according to the U.S. Census Bureau. Many women live another decade or longer after their husband's death. Women may have a passive role in money and investing and hardly ever talk about money or investing. They don’t discuss these topics with their friends or co-workers and perhaps not even with their spouse. Just 3% of married female clients lead wealth conversations, according to Key Private Bank's advisor poll.
A “Lifebook” can help women successfully take control of their finances. This book is a collection of important documents and data, such as a balance sheet, an investment summary and a will. It should also include contact information for attorneys, financial advisors, bankers, insurance agencies and accountants. Many of the professionals surveyed—about 80%—said very few of their married female clients have these types of plans in place, in case they are suddenly single, according to Key Private Bank. This is even though there are often critical financial decisions that must be made immediately after the death of a spouse.
It’s important to have a strategy because navigating finances after the death of or divorce from a spouse can be confusing. The top three steps married women should take are the following:
1. Identifying and documenting sources of income;
2. Meeting with a financial advisor; and
3. Determining the financial decisions that must be made immediately.
Those who’ve lost a spouse and those divorcing may also find themselves with less money for their budget. Considering this, you should also identify expenses in your discretionary pool, like vacations, memberships, and services that can be stopped immediately to reinstate your cash flow. If you are not aware that those are discretionary activities, you could drain your emergency fund in a hurry.
Reference: CNBC (September 5, 2017) “How to prepare for being 'suddenly single'”