The Hidden Risks of Managing Money Solo In Marriage With Sara Gelsheimer (EP.175)

0:28We all need to make smart decisions with our money. I'm a senior wealth manager at PlanCorp, and we're going to be discussing the importance of having both spouses involved in their household financial decisions. Now, it's pretty common for one person to take on the CFO role in the household, but Sarah and I explore the risks when only one spouse manages the money, as well as the steps both the CFO and the non-CFO of a household can take to stay informed. Sarah shares some real-life stories, lots of actionable tips, and important resources that help couples navigate financial conversations and prepare for the unexpected.

1:06And you can find all of that information in the show notes at thelongterminvestor.com. And now, here is my conversation with Sarah Gelsheimer. Sarah, welcome back to The Long-Term Investor. I appreciate you having me back. You and I were talking the other day that it's pretty common for one spouse to handle the finances. I was hoping maybe you could start us out by sharing what some of the biggest risks are when only one person is managing everything. Sure. Obviously, it's not uncommon for one spouse to handle a particular task or divide up their tasks based on interest, comfort level, knowledge, whatever the case may be.

1:49it's also certainly more efficient for one person to do something versus two people attempting to do the same task. So, I mean, that's no different when it comes to financial tasks. It's just that when one person in particular handles the vast majority of those tasks, you run the risk that if something happens to them, that other spouse is kind of left in the dark. And so if that's taking out the trash, okay, you can probably figure that out. But if it's your entire financial picture, that's a little bit harder to piece together. So that's where it's really important to make sure that even what I would say is the quote, non CFO in the household, it's just important that they at least have a general understanding of what those various tasks and what the financial situation is overall.

2:36And, you know, certainly, in my over 15 years of experience, and research shows this too, when it comes to these various financial tasks, more often than not, they're handled by the male in the relationship. That's not always the case. It's not even the case in my own household. I mean, it's probably not too surprising that I handle that in my house since that's what I do for a living. But there are a lot of people, especially in the older, the baby boomer generation, where it's the male handling those tasks, especially when it comes to investments, retirement planning, and you couple this with the fact that women tend to outlive men by five to seven years, and that presents an issue, especially if it's the male who's been handling the vast majority of those financial tasks.

3:26Well, and I see all the time statistics related to women and longevity, as well as financial literacy. Are there any key numbers that you feel like really stick out? And maybe you can go a little into why it's so crucial for women to be prepared financially, especially before a tragedy occurs? Oh, absolutely. The fact that women do tend to outlive men by that five to seven year mark, you couple this with the fact that women also tend to marry older men, which just exacerbates that issue. Another interesting call out is that the divorce rate is very high. So divorce is very prevalent. And gray divorce, which is defined by divorce happening in those who are age 50 or older, has become extremely prevalent.

4:14In fact, I think it accounts for almost 40 % of overall divorces now. So all of that leads to the stat that about 85 % of women will handle their own finances at some point in their lives. Okay, so it is almost inevitable that women are going to be taking care of this at some point, whether they're choosing to or forced to based on a tragedy. And so obviously, if you can get a good handle on it before that tragedy happens, that's of course, the more ideal situation. So trying to grieve after the loss of a husband or after a divorce and trying to piece together your financial situation at the same time, I mean, that's less than ideal.

4:58So that just really shows all the reasons for getting your grasp on what those various pieces are ahead of time. There are some factors that tend to hit women more so than men. So the fact that we live longer also means we end up having greater health care costs. Often women take a break in their careers for caregiving or some have only worked inside the home. So that can lead to less retirement savings. Obviously, that also has an impact on Social Security. A lot of women also are more conservative with their investments. So all of these position them with some headwind. And so again, just reiterates the importance of making sure that they have a good handle on their financial situations as early as possible.

5:43Well, and whether you're male or female, or in a same-sex marriage, it's really important, I think, for both spouses to be in the know when it comes to their financial situation. In your experience, I think you'd agree. Maybe you could explain a little bit of why it's so important for both spouses to be in the know. Yeah, for sure. And I'm so glad you called that out because it really is not solely a male-female situation. It is a primary CFO in the household and a non-CFO. And that doesn't have to be within those lines of gender. And so it's really just important that both spouses have that good understanding of the financial picture.

6:22And it's very beneficial for both parties. So number one, it can lead to better relationships. I mean, money is one of the biggest stressors when it comes to relationships. And so if you can have regular conversations, get on the same page when it comes to your overall goals and how you're going to fund those goals, it's going to lead to better relationships. And I mean, who doesn't want a better relationship, right? We can all improve in that area. And then your financial goals are actually more likely to be achieved when both spouses are on the same page. So it can help you achieve your goals.

6:55And then I think really the most important aspect of both spouses being in the know is that it can give you both peace of mind if something were to happen. I mean, that to me, it's probably the most common phrase I hear from clients is, gosh, I'm so grateful because this has given me such peace of mind now that we both are on the same page when it comes to our overall situation. Sarah, you mentioned how it's usually the husband who's the household CFO, not always, but usually. And in your career, I'm wondering if you could just share some of the real life examples you've helped families with, especially in cases where the couple eventually separated or faced a loss.

7:35Yeah. I mean, I've certainly had plenty of situations where the reverse has been true, just like I mentioned. I mean, it's not a one size fits all by any means, but particularly in that older generation, a lot of my clients in the baby boomer generation, it has been the male that has done the majority of the financial decision-making and the tasks. And what's interesting, I had a couple of clients that came on board right in a row a few years ago, and it was a very similar thread among these few different client couples. and I'll share the experience with one of them. So in their mid-70s and had been that quote traditional situation where the male had been handling their tax prep, the investments, the bill pay, pretty much everything when it came to their finances.

8:26And so he had been pretty much a do-it-yourselfer. He had a stockbroker that helped him with a couple of accounts, but otherwise had done it all on his own. And so he got to this point where he said, I'm ready to find an advisor, a holistic advisor, who can not necessarily help me with all these things, but really just, I want to find an advisor who my wife would feel comfortable with if something happened to me. And so I ended up working with them. And first of all, I'll mention that it was kind of funny or nice to see that once he started working and realizing all these different things that we helped him with, there was a lot he didn't know or hadn't been taking advantage of because he just didn't know.

9:08You know, there were tax planning strategies, estate planning strategies. We were able to implement a lot of uncharitable planning as well. So we were able to do a lot more for him than I think he had originally anticipated. So that was kind of an extra bonus win. But his whole goal in establishing this relationship was having someone that his wife felt comfortable calling if something happened to him. And we've spent the last few years really helping her get up to speed and feel like she does have a good handle on their situation. She's told me numerous times how grateful she is that I'm here and can help her.

9:45I mean, I've addressed her questions separately at times and just really helped her feel empowered to get a grasp on her situation. And fast forward even further, unfortunately, they're part of the gray divorce statistic. They ended up getting divorced. And I can only assume that this whole process, which has not been fun, of course, been horrible, but I can only assume that this would have been far worse if this was the first time she was faced with figuring all of this out. So she's told me numerous times how grateful she is that she at least went into this divorce and being separated and starting out on her own with that baseline knowledge that we had established along the way.

10:28I mean, you can contrast that with a couple of different stories I have where a woman has not come here to Plain Corp until they lost their spouse. And it was a much harder hill to climb when you're trying to go through that grieving process and also try to get a handle on your whole entire financial picture at the same time. I appreciate you sharing that story. I feel like we see people come, particularly like When I'm doing the call booking campaign through peterlazaroff.com, I feel like the number one reason listeners of this show, readers of the blog, come and schedule those calls with me is that they want a backup plan.

11:08They want this insurance policy for the non-CFO spouse, if you will. And just like you said, we often find all these blind spots because when you are a really good saver and investor and you're a regular consumer of information to help you do it yourself, there is a certain point when you outgrow that sort of advice. And it's really hard to tell until you put a set of professional eyes on them. But that other piece, like you said, being somewhat like the insurance policy for the non-CFO spouse may not seem to pay dividends immediately. And oftentimes it does, but not always. You can't really predict what life is going to throw at you.

11:44And it's a really great reason to talk to somebody. Before I move on, quick shameless plug. If you go to the longterminvestor.com, go to work with me, you can schedule a call. You can ask that Sarah be the one on the call instead of me if you'd rather talk to Sarah. But we'd love to talk to you, love to help you, especially if you have a spouse who is less involved in the finance, help us be a more collaborative process there. And maybe on that note, a good transition spot. I'd like to focus for some actionable steps for the non-CFO spouse, specifically, in your opinion, some steps that they can take just to gain some confidence and begin taking a little more responsibility with the household finances.

12:24Well, first and foremost, I want to say you can do it, especially if you're a female sitting in that seat. I've heard so many women say, oh, I'm just not great at numbers, or I'm really bad at math, or I'm just not interested in finance, or it doesn't come naturally to me. I mean, I've heard all those things, and all are perfectly fine. I mean, you don't have to be a math guru. You don't have to love finance. But I want you to give yourself more credit. So I'm always super interested in reading about anything related to women and investing. And when you read some of these statistics around financial literacy, so when women are given a financial literacy test where I don't know is an option, it is frequently chosen.

13:08However, if that option is removed from the test, women tended to get the answers correct. So obviously, this suggests that women really know more than they think they do. So often, it's really more of a financial confidence gap than it is an actual financial knowledge gap. So I just want to start by saying, give yourself more credit because you probably do know more than what you think you do. But when it comes to what you should have a good understanding of within your financial picture, keep it simple. I love that saying that you don't have to know how the watch works. You just have to know how to tell time.

13:46I think that's a great analogy for this non-CFO spouse. So first of all, I would say get a good understanding or a general understanding of the money coming in and the money going out each month. It sounds pretty intuitive, but know what's coming in. You can review your bank statements, your credit cards for those cash flows. So getting a good handle on those pieces. And then you should have a good understanding of your assets and your debts. So what you owe and what you own. So where are those located? What types of accounts are they? Retirement accounts, taxable accounts, real estate. So know where those accounts are being held.

14:22and then similarly on the liability side, what do you still owe? Where are those payments going every month? So just a general understanding of that. And then you need to know where your important documents are located. So this would be life insurance if you've got it, how much you have, what the term is, where your estate documents are located. So this would be your wills, trusts, powers of attorney. That's incredibly important to know where those are and have at least a general idea of what they say. That's one of the benefits of working with a holistic financial advisor is, for example, on the estate planning side, we take your 75-page trust, distill it down to one-page diagram of how those assets flow.

15:07So it's in a way that you can read it and make sure that it all says what you want it to say. So make sure where those are located. And then lastly, I would say just knowing who that team of professionals is and how to get a hold of them. So this would be your financial advisor, your insurance agent, whether that's your property and casualty, your auto, home, liability coverage, life insurance agent, and then your tax preparer, know how to get a hold of him or her as well. So if you have those few pieces down, you're in a really, really good spot. So just knowing who to call if something happened to you and generally what you have and where it's going is incredibly important.

15:48Great advice, Sarah. And I'll be sure to outline those steps in the show notes at the longterminvestor.com. But I wonder if we can now flip it a little and think about the person who is acting as the CFO spouse. How do you feel like they can ensure their partner's prepared in case something happens to them? Right. Yeah, absolutely. I mean, if you are the CFO in your household, you are not off the hook here. So just because you might have a good understanding of what all these things are, you're not done. So I would say, if anything, creating a document, we have a template for this. It's called our estate plan memo.

16:24And I assume we can link that in the show notes as well. But download a copy of it and fill it out. So this goes into all of those different categories I just named for this non-CFO spouse to have a good handle on, in addition to some others. So it is an incredibly helpful resource. And so if you can sit down and fill that out and give your spouse a copy and maybe even your kids or whoever else might need a copy, that is a huge task and a huge benefit to everyone involved. And then having regular conversations with your partner about this is very helpful. Have him or her sit down with you as you're doing some of these things just so they can see and learn through osmosis what's being done.

17:09My husband and I set up, we call them our money dates. And because we're money conscious too, we do these over lunch during the week since we already have child care covered. So now we're not paying a hundred bucks to go out to eat. So we do our money dates during the week. We try to do them once a month, once every couple months. That's pretty good. We do money dates too, but not that frequently. Well, I would say a lot of them end up getting pushed to the wayside because other things tend to take priority. But at least having them on the calendar, it's our chance to sit down and talk about these things.

17:42I mean, we have three small kids, so it's not often that we can like sit at the dinner table and talk about our retirement goals because we've got children screaming in our ears and throwing food. So having these dedicated times to talk about money in one of our more recent money dates, I went through this estate plan memo with him. I've been working in this industry for a long time now, encouraging clients to do this, and I hadn't done it yet. So I was like, man, if I get hit by this proverbial bus, my husband will be in the dark. So I finally sat down and went through this with him, which really gave me a lot of peace of mind.

18:17And I'm sure it did him as well. So that's another little tidbit on if you are the CFO partner, you know, scheduling time to go through some of this stuff. And then, of course, I would encourage everyone to work with an advisor. I just think there's so much that you don't know. You don't know what you don't know. And so finding an advisor that both of you feel comfortable with is one of the best things you can do really for your spouse. It's one of the most caring things that you can do for that non-CFO spouse. The statistics are, I think it's over 75 % of females end up leaving the advisor that their husband had after death or divorce.

18:57So clearly right now, the majority of people who do have advisors, they're not connecting with both spouses. So find someone that both spouses feel comfortable with. I know we've got some great resources on the Plain Corp website, like how to interview an advisor, what to look for as you go down that quest. So there's some really great resources as you start to look into finding someone that both of you feel is very trustworthy. And I'll mention too, if you go to Plain Corp's Inspire Her, so this is our women's initiative at Plain Corp. So it's plancorp.com slash inspireher. We also have a link to schedule with one of our female advisors.

19:37So I know a lot of females and sometimes males, even like we just talked about, want to find a female advisor. And so if that's of interest to you, we've got some really great women advisors here and you could be directed to scheduling a call with one of them. Well, we're always biased in believing that having an advisor makes a huge difference, obviously, because that is our profession, but also we watch it unfold every single day. I wonder, are there things that you feel like people in this situation where there's one clear dominant CFO in the house, maybe dominance is too strong a word, but there's a non-CFO and there's a CFO in the house.

20:15What are some things in an advisor you feel like they ought to be looking for? I mean, I think first and foremost, having this holistic approach where an advisor is going to not just manage your assets, because a lot of advisors out there simply manage your accounts. And if that's all they do, there's a lot you're still leaving on the table. So finding an advisor who takes a look at your entire picture and helps you look at your estate planning documents, look at insurance, whether that's life insurance, health insurance, long-term care insurance, disability insurance, like having a good grasp on all of that and how those play into your overall financial picture.

20:52Making sure that they're giving you recommendations on tax planning. So making sure you're giving to charity in the most tax-efficient way and other tax strategies. So being able to take a look at your entire picture is a very important aspect to look for, especially for the non-CFO spouse, because that person in particular isn't going to know all these different areas. And so I think the holistic approach, certainly fiduciary. So a fiduciary is someone who's required to act in the best interest of the client. I mean, I think that goes without saying, but unfortunately, that's not every advisor out there.

21:28And then I think it really comes down to personality and feeling comfortable with somebody, feeling like they can explain things to you in a way that doesn't make you feel stupid, making sure that you feel like they are trustworthy, they're genuine, and having that companionship. And I think that's particularly, again, important for the non-CFO spouse, because most likely, if that is the person that outlives the CFO spouse, then they're going to be spending a lot more time with that advisor, probably, with asking more questions and having that companionship and support along the way. Well, you know, I think those are all useful things for people to keep in mind.

22:08Again, we'll link to some of the resources, some of the points Sarah's made in the longterminvestor.com. And I think you and I know sometimes the biggest questions aren't really about the allocation strategies or the tax breaks. They're just about building the confidence that you aren't making mistakes and the type of mistakes that you aren't even aware of that could cost you or your spouse or your future generations. And so I think we're really just trying to make sure that people are making the right moves to extract everything for their opportunities. And I think you can find as you're talking to different advisors, you can find out if that's really what they're in or out for.

22:44Now, I'd like to wrap up a little bit less on the commercial side here that we've offered a lot of valuable advice today. I think, even if this means that you're repeating yourself a little bit, if you could give listeners one action to take after this episode, what is it that you would recommend for both the CFO and the non-CFO spouses? So honestly, I think it's that estate plan memo. I think if the CFO spouse can get that created, and a lot of times going through that document is necessary for both, because in a lot of client couples that I work with, it is the male who's doing the taxes and the estate planning stuff and some of those other areas, but it'll be maybe the wife that's doing all the bill pay or the property and casualty insurance.

23:32So there is often the case that there are tasks within the financial umbrella that are done by both spouses. So it takes jointly going through this together and putting it together. So I think that is probably the biggest takeaway. way, if you and your spouse can sit down and go through that and then refresh it. So it's not a one and done. I mean, I would schedule time at the very least to do this when you do your spring cleaning or some annual reminder for you to take this out, dust it off, make sure all these things are still up to date, make sure you guys are talking about all of it. So at the very least, I think just this one document can be immensely helpful.

24:10Well, one more question before I let you go, Sarah, are there any resources that you find yourself pointing to more often than not, whether it's podcasts or books that can help that non-CFO spouse deepen either their financial knowledge or just strengthen their confidence in being involved? Sure. I mentioned it earlier. So the founder of Inspire Her, our women's initiative, and as part of that initiative, so anyone who joins that membership receives all of the educational content that we produce regularly. We also host several events per year. A lot of them are local, so here in St. Louis, but we've done some virtually as well.

24:51So that's a great resource to find information. We try to write things from a female perspective, use analogies that tend to resonate more with females. So that's a great place to find some content. So again, that's plaincorp.com slash inspireher. Would highly encourage you to sign up for our newsletter. That's where you're going to find out this information that we send out, including our events. So that's one great place to start. I know I personally on LinkedIn share a lot of content, so certainly feel free to check that out. In terms of books, I mean, I will give you a shameless plug as much as I hate to do it, Peter, but Making Money Simple actually is a really great book.

25:32Well, hey, thank you. Yeah, I've given that out to a lot of people. It goes through all of this information and more in a very simplified way. And I love that it's not super long. So it's not as intimidating as other books on money. So that's a great read. Getting Good With Money by the Budget Nista, if you've seen that, that's a little bit more in-depth. So it's a bigger read, but it's a good one, especially if you kind of want to start at ground zero and work your way up and figure out all of this. In terms of podcasts, obviously, this is a great one to learn financial information on. There are so many.

26:06I mean, there are so many resources out there that it can be overwhelming. So I would say pick whatever medium you use. So if it's a podcast, do it while you're on a walk at night, do it on a drive, just commit to doing something even 10 or 15 minutes a day, whether it's reading for 10 minutes or doing a podcast for 10 minutes. And before long, you'll have a wealth of information. No pun intended. Well, I didn't want to interrupt you when you were mentioning your LinkedIn, but I think your LinkedIn account is one of the best things I follow, period. And so if you're on LinkedIn, find Sarah Gelsheimer.

26:42We'll link to it at the show notes at the longterminvestor.com. I kind of think of what you're doing there as micro blogs. So if you have an attention span that doesn't quite last as long as a full book, I think you can get a lot of links to good articles as well as immediate, quick hitting, just in time insights from Sarah. So definitely be sure to follow her at a minimum, if not connect with her and say hi to her and tell her how great she did on today's episode. I always appreciate when you do this, Sarah. Thanks so much for your time today. Thanks for having me. Thanks for listening to the Long-Term Investor Podcast.