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I recently did a radio interview where I was asked to give a young man who is a recent widow money tips. He is now a single father to three young boys and had concerns about how to deal with his new financial situation. Here is what I shared with him and the radio listeners.
Losing a loved one like a spouse, that is so significant to the family, is devastating. Adding to the responsibilities of the spouse that has past can add to the stress and fear of the new young widow. While there is so much that needs to be done to keep the family structure in place, here are 3 things to do for the household finances.
#1. Create a New Household Budget
There is either a decrease in the household income, an increase in household expenses or both. Most of the time the surviving spouse not only lose their loving partner, they may also lose the associated income that contributed to the household’s financial stability. If the late spouse was a stay at home mom or dad, new expenses like daycare or after-school care may be added to the household expenses. If this is the case, a new household budget is necessary.
Writing out all of the existing and new household expenses will help the surviving spouse make important financial decisions, like whether to downsize living expenses, cut out or reduce certain activities, or necessity of adding to their income stream.
Knowing the financial position of the family is just as important as creating and working towards financial goals.
#2. List and Prioritize New Financial Goals
The devastation of losing a spouse may pause or change your financial goals.
Once your new household budget is established and stabilized, new or modified financial goals must be executed. Financial goals, like paying off debt, saving for retirement, saving for children’s education, or that family vacation, can still happen. However, with potentially limited or reduced income, they may need to be prioritized. It’s harder to catch multiple balls thrown in the air for one person, so focus on which financial balls to catch (financial goals to work) on first, second, third, etc.
Just never stop working towards accomplishing those financial goals.
#3. Update Beneficiaries, Wills and Life Insurance
Update Beneficiaries
This is a tough one to do, especially if the loss of a spouse is recent. However, it is the best time to get it done so it won’t have to be dealt with it later or forgotten about.
Update beneficiary information on all financial, medical and employment documents. If the child(ren) are under the age of eighteen, designate a trusted family member or friend that will carry out the wishes to financially take care of them. Or, establish a Trust and make the Trust the beneficiary. With a Trust, the Executor will legally carry out the disbursement wishes for each of the beneficiaries.
Update or Create a Will
Update the Will, as necessary, and designate a family member or friend to be the estate executor. If a will is not in place and an estate executor is not designated, it is called dying “intestate.” Which means …
Having a Will is especially important to have if there are children so that a trusted guardian is designated to take care of them.
Click here to read “10 Easy Steps to Writing a Will.”
Update or Get Life Insurance
Life insurance can be a financial blessing by covering final expenses, paying off debt, replacing the late spouse’s income, establishing or adding to an emergency fund, retirement account or educational fund for the child(ren). However, not having life insurance can cause major financial chaos to the surviving family.
This is the time to re-evaluate existing policy(ies) to make sure it is enough for the family or to obtain life insurance to protect the family from financial hardship.
If the late spouse had life insurance, after the final expenses are handled, consider using it to fund one or a few financial goals, like debt elimination, retirement savings or children’s college fund. Avoid spending it on lots of nice things or places that will not be beneficial to the family’s financial future.
If the late spouse did not have life insurance, follow steps one and two, then speak with a Licensed Life Insurance Agent to discuss options. Just remember that one size does not fit all when it comes to Life Insurance and the most important question that needs to be asked before shopping for life insurance is:
“What do I want the Life Insurance to do for my family and while I’m alive.”
Keep in mind that Life Insurance does not have to be death insurance. Life insurance can be a financial tool and investment to assist in reaching financial goals as well as take care of your family when you pass.
The new normal of living without the spouse is emotionally, physically, spiritually and financially draining and overwhelming. Just remember to take it one at a time and ASK FOR HELP! Your family loves and needs YOU!
