True Blue Financial Coaching

Calling all couples! If you’ve been meaning to get started on that all important paperwork to protect each other and your assets, now is as good a time as any. Most of you probably know that as unmarried couples we miss out on all of the federal rights granted het folks and most of the state rights, depending on where you live. So we need to spin our own legal web to protect our wishes with respect to our money and, even more crucially, our wishes concerning decision making when we are at our most vulnerable.

I wish as much as you do that we could simply marry (everywhere!) and none of this would be necessary. Throwing coins in the fountain and making wishes might get us there eventually, but today we need to take action. If you are the type of person that would rather listen and learn than read and learn, then this post is for you. My wife and I produce and host a finance show on our local community radio station. Our last two shows were dedicated to the special financial planning needs of unmarried couples.

We had the great good fortune to interview Sheryl Garrett, a well known Certified Financial Planner and Co-Author of Money Without Matrimony: The Unmarried Couple’s Guide to Financial Security. We’ve extracted just the interview portion of the two shows and combined them here for you to listen or download.

The hardest part seems to be just getting started with the planning. I’d love to hear some of your stories and strategies.

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Carol Christie is a Registered Investment Advisor and has a fee only financial coaching practice serving individuals and small businesses with a special focus on non-traditional couples.

Photo credit: stock.xchng.

There is one pillar of the financial foundation (if you read part 1, this will make much more sense) that is especially important for non-traditional couples and that is a Durable Power of Attorney for Financial Management (DPAFM). If you become incapacitated and have not designated an attorney-in-fact or an agent via this document, the courts will likely choose your closest living relative (sibling, child, parent) to manage your financial affairs. This may be perfectly acceptable to you. If so, skip to the next paragraph. If, like me, your partner is your closest living relative regardless of legal definitions…read on. Remember that with few exceptions (states with gay marriage or civil unions), you and your partner have no legal status. If you wish to have your partner handle your affairs in the event you are unable to, you must have a DPAFM drafted by a knowledgeable attorney in your state. There are many ways to limit or condition these powers so that you need not feel any loss of control. It is equally important that this document be modified should the partnership dissolve.

Even more critical to non-traditional couples, (this one has nothing to do with fiscal fitness), is the Durable Power of Attorney for Medical Care (DPAMC). I can’t imagine anything more heart-wrenching than being in a hospital without my partner at my side because our relationship has no legal status in our state (FL). The ONLY way to prevent this is to execute a DPAMC. Copies of this document should be given to your medical professionals, families, employers, attorneys (if applicable), stored in your vehicles and carried with you. This is the first document we drafted because the consequences of not doing so far outweigh any financial concerns. Again, this document is best drafted, or at least reviewed, by a competent attorney in your home state.

Sensitivity to non-traditional couples is generally increasing and the medical profession is staffed by some of the more compassionate members of our society but I am not willing to risk separation from my partner at the time of greatest need. What about you? Do you have these agreements in place?

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Carol Christie is a Registered Investment Advisor and has a fee only financial coaching practice serving individuals and small businesses with a special focus on non-traditional couples.

Financial planners use a pyramid as a metaphor for fiscal fitness much like nutritionists use the Food Pyramid.  Fitness (or proper nutrition) is optimized when built upon a solid foundation.  The base of the foundation is about risk management.

One pillar of the financial foundation is the cash fund.  You have probably heard the recommendation to maintain the equivalent of 3-6 months of living expenses as an “emergency” stash. The use of “emergency” is common but rather ominous. A better if slightly more awkward description is the “unexpected need” fund. You can plan for most future expenses such as a new roof on the house or a replacement vehicle because you can reasonably predict their lifespans. If only all of life were so predictable. Stuff happens. If you have a minor car accident and need to schedule a repair, it is not exactly an emergency but it is certainly not something you plan for.  A dip into that cash fund is infinitely better than using credit.

Speaking of credit, let’s talk about debt.  Staying with our metaphor…think of it as a sinkhole beneath the pyramid. If it is not filled first (read eliminated) the foundation will be very shaky indeed.

As a couple, even if you maintain separate finances, think like a community for the purposes of calculating the cash fund.  You may be closer than you think!

Please share your thoughts. I love to learn from others and I suspect I’m not alone.

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Carol Christie is a Registered Investment Advisor and has a fee only financial coaching practice serving individuals and small businesses with a special focus on non-traditional couples.

Photo credit: stock.xchng.