I received a helpline call last week that reminded me of why it is so important for all of us to be financially independent. I’m not talking about having so much money that you can do whatever you want, but rather being in a position to manage your own financial affairs if and when the need should arise. perso
The call came from a woman, we’ll call her Judy, whose husband has been self-employed for the last few years. As you can imagine, the recent trouble in the economy has hurt her husband’s business, but what she did not realize is that her husband has failed to pay income taxes for the last several years. As the breadwinner of the family, Judy’s husband has “managed” the household finances, but now she sees that he has managed to run them into the ground. She is moving forward with a planned separation, but she is scared to death. Until now, she has not had to pay bills, or even balance a checkbook. Now she faces life without someone else to take care of the expenses, and in desperation has reached out to her employee assistance program for help.
Her story, sadly, is not that unusual. There are thousands of people, usually women, who rely heavily on a spouse or partner to take care of the finances, only to end up alone, either because of a separation, or an untimely death, as was the case with my former neighbor Mrs. P.
Why is it that people like Mrs. P and Judy end up this way? Some may say it is a condition of our culture, others a lack of financial education, but whatever the case, it needs to stop. This is something I harp on my wife about constantly. Sure, as a financial planner I’m pretty good with money, but what if I’m hit by a bus tomorrow? I’ve tried over and over to get my wife interested in our finances, and she even admits that she’d be lost without me, yet she has done very little to increase her knowledge of our situation. I don’t expect her to become a financial expert, and I’m not asking her to take over managing the household finances, but I certainly don’t want her to end up like my caller from last week.
Our latest research suggests that there is still a large gender gap when it comes to cash management, and it seems the gap gets wider when the economy sputters. Here’s the thing: being helpless when it comes to finances hurts us ALL. Susan and I are committed to helping our former neighbor get back on her feet, but she has no financial legs to stand on. As much as we’d like to help, it is physically and mentally draining to see someone in such a state of disarray. Her son will be heading off to college next year, but what kind of financial behaviors has he learned?
I think the only way to combat this is to take the attitude of Henry, a caller from two weeks ago who, when faced with what seems an insurmountable debt, has resolved to “do whatever it takes” to overcome his obstacle. For Henry, he’s grabbing the proverbial bull by the horns and trying to get ahead of the game. For Judy and Mrs. P, they’re behind the eight ball. You can’t wait for something to happen to suddenly realize you need help. The time to act is now.
Go to the local library and check out books on personal finance. Go to the bookstore and ask a clerk for some recommendations on books on investing. Find a public figure to follow, and pay attention to what they say. My personal favorite is Dave Ramsey. I’ve taught his Financial Peace University courses and think they should be required for everyone. Talk to your employer about offering financial education as an employee benefit. Whatever you do, don’t just sit around and wait to become a victim. There’s too much of that already. You have nothing to lose and everything to gain.