Are you prepared for a financial setback?

April 29, 2016
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A financial setback can have different meanings among different people. Some may define it as a stock market crash. Others may define it as depleting their non-retirement accounts because their emergency fund wasn’t enough to cover unforeseen/unplanned expenses. I define a financial setback as one where the financial lead-person in the household dies, putting the surviving spouse in a stressful period with newly added financial responsibilities which he/she may not be ready to take on in his/her time of grief.

It’s very easy for families to get to this point. Whether we’re busy with our jobs, raising kids, our social lives, or all of the above, at one point in time, we delegate roles and responsibilities in our households. Once these roles are established, we get into a routine, and very rarely do we break them by choice because it’s easier to complete our tasks with a system in place. While it’s ok to delegate these responsibilities with simple tasks such as doing the dishes or taking out the trash, it’s not as ideal to do so with the household finances.

Imagine this. Your spouse has taken the responsibility of being the financial lead-person in the family. In doing so, he/she is in charge of paying all the bills on time, designates how much money can be spent on various categories within your budget, and files all of the financial documents away. When he/she takes care of these things, are you actively involved in the process? Unfortunately, the answer is usually “no”. In some cases, you may be passively involved whereby your spouse shows you a spreadsheet of the budget and tells you that he/she is paying the bills, but in most cases, while he/she is taking care of the finances, you are probably distracted in taking care of the kids. This system may work while everyone has the ability to accomplish their tasks, but if your spouse were to die or become incapacitated, would you really know where to find that spreadsheet of the budget? Would you know when to pay the bills? Even if you did know when to pay the bills, an increasingly more important question nowadays is do you know the username and passwords for each account so that you have access to them?

How can we prepare ourselves for such a setback, especially given the fact that we won’t live forever?

  1. The financial lead-person should make a list of all accounts which money is to be paid to/invested each month. On this list, he/she will want to make a note of what day of the month that particular account is usually paid (ie the water bill is usually paid on the 17th of the month).
  2. The financial lead-person should create and maintain a list of usernames and passwords related to each financial account (ie credit card, utility bill, investment accounts). This list should be printed on a piece of paper and filed somewhere with your other documents.
  3. The financial lead-person should make sure that a copy of the budget is easily accessible to his/her spouse.
  4. The financial lead-person should make a comprehensive list that documents all investment accounts, life insurance policies, and contact information for financial professionals (ie financial advisor, tax professional, estate attorney), so that his/her spouse doesn’t need to frantically search for this information in the event of death or incapacity.
    • Note that if you are an existing client of mine, this task was already accomplished in our first meeting.
  5. Make an appointment (or even a date night) with your spouse to walk through the responsibilities of the financial lead-person. At this time, the financial lead-person should:
    • Review the list mentioned in #1 with his/her spouse, so that the monthly cash outflows are known.
    • Make sure that his/her spouse knows where all of the aforementioned lists can be found (ie usernames and passwords, copy of the budget, etc).
    • Walk his/her spouse through his/her filing methodology of investment accounts, life insurance policies, etc. While this may sound like a simple task, it can be frightening to the other spouse if he/she has never looked at how things are organized. Doing so allows him/her to ask questions now while the financial-lead person is able to answer them.

Setbacks can create chaos in our lives and break us away from the routines that we’ve become accustomed to. While you may not look forward to the additional work necessary to prepare for a financial one, the time you put in can ease the stress to your loved ones and give you the confidence that your family is taking one step closer towards financial success. Contact me if you need help or have any questions.

About Mike Loo


Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@lpl.com.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Trilogy Capital, a registered investment advisor. Trilogy Capital and Trilogy Financial are separate entities from LPL Financial.