When you get married, it may be comforting to transfer all financial responsibilities to your spouse. However, choosing to uninstall your financial liability can come at a price.
Take the following as an example: A wife recently checked her family’s financial situation and found that there was $31,000 in credit card debt. Her husband controls every penny and she has no clear opinion on where the money goes.
The debt shocked her, especially because she made $120,000 a year. Now, she wants to learn how to protect herself financially, especially when the couple divorces.
Although the average family with credit card debt has a credit card balance of $6,065, the high interest rates typically associated with credit cards can make it difficult to climb out of this loophole.
But the real problem is not just the credit card balance. After all, financial infidelity is more than just a secret expense. The couple may also be dealing with a lack of financial literacy.
According to a recent study, only about 48% of adults in the United States have a baseline level of financial literacy. Without the right knowledge, it is difficult to control the financial situation of a family even without controlling for the spouse’s additional complications.
Married couples often have shared assets, such as homes or bank accounts. In addition to shared assets, many married couples have liabilities such as mortgages or credit card debts. However, when a partner is unaware of the shared debt, this puts them at financial risk, especially during divorce.
Many married couples usually share a shared responsibility for the debt accumulated during marriage. For example, if both parties open a joint credit card, they are both legally responsible for repaying that debt.
Even if you and your partner actively choose to separate the finances and avoid joint credit cards, state law may decide that both parties are still fighting for any outstanding debts. For example, if you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, your partner will be in debt.
Whether the divorce is on the table or not, it is very important for the person to participate in family finance immediately.
While it can be challenging to establish new behavioral patterns around currency, it is crucial to visit the same page financially with your partner.
If you find yourself in a similar situation, invest in your financial literacy first. As you have the ability to revolve around financial topics, you may begin to build confidence in making joint and personal financial decisions.
If you intend to unite, ideally you will bring together around the core goals of currency management. For example, if repayment is important to you, you hope you and your partners can work on taking care of your credit card debt as soon as possible.
If the divorce is on the table, you will need another way. Start collecting information about the financial status of your family. Measure assets and debts. If you are not sure where to start, look for credit card statements, tax returns and bank account transactions to build a situation where the funds go each month.
Use clearer pictures and move quickly to open your bank account. Start depositing your salary into this account and save to get you through possible rough patches in the future. As far as household bills are concerned, you can transfer the necessary funds (only required funds) to a joint account with the scheduled payment.
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If you are worried about your spouse opening more joint credit cards, temporarily freeze your credit, which can prevent any new loan from opening up in your name or harming your personal credit score.
Consider getting help from a financial advisor to help you assess your situation and help you prevent future financial losses. If divorce is an urgent concern, consider getting lawyers involved as soon as possible.
Regardless of the circumstances, it is crucial to establish financial autonomy for both parties in each relationship. Although it is common for women to leave money management to their spouses, even those who support their spouses the most can backfire.
A recent Fidelity report shared that almost 90% of women are responsible for their situation at some point in their lives. This could be due to divorce, widowedness or the choice to stay single.
With this in mind, it is best to establish financial autonomy as soon as possible. Starting with building financial literacy is often the most important thing. Learning how to manage your money can help you develop plans to protect yourself financially.
For many women, rebuilding financial autonomy involves building an emergency fund and establishing a personal credit account while working to track your financial and personal budget. After achieving these basic knowledge, the correct actions will change according to the individual's condition.
For example, a woman may choose to pay off her credit card debt, but a debt-free woman may start actively saving for retirement.
For those who lack confidence in their financial plans, consider turning to a financial advisor to start.
Along the way, you can evaluate the ongoing needs of a financial advisor as you gain the skills you need to build long-term financial stability and independence.
This article provides information only and should not be construed as advice. It is without any warranty of any kind.