Not everybody is keen or happy to share personal financial data with one’s  family. Money is very private – and there are men who will not even want their wives to know the more minute details. It can also alter the family dynamics, demands, expenses even impact some other family members negatively! There is a lot at stake and it cannot be undone!

Having said all that, it still makes sense to open your books (so to say!) – which would mean your online portfolios, bank accounts, mutual funds, life insurance policies…etc. to your family. The obvious reasons of course are you never know when someone else, MAY HAVE TO STEP in and handle your physical needs if you are incapacitated. Remember the cricket team takes 2 wicket keepers? This person could be your spouse, sibling, elder kid, or even a parent. By including that person today you are just getting them to do a warm up and make them understand your way of thinking, logic and which investment is for what.

I encourage all my clients to create excel sheets of which is investment is for which purpose – if they do not want to create a proper Investment philosophy statement. Of course if the husband and wife are doing the investments together the need is lesser, but having it in writing helps. Try it.

WHAT TO SHARE?

Start by sharing bank account details, which are the mutual funds in which you have invested, your living will – what you want to do if you are incapacitated, and giving a Medical Power of Attorney (do not bother about its legal validity). Tell your spouse everything and in case she cannot operate independently bring in a person who can handle the operations – could be your own kid if he/she is grown up or a sibling or a good friend. This means all your financial details are now with one more person. As and when you update make sure you keep the other person informed.

WHAT NOT TO SHARE?

YOU do not need to share your bank password, mutual fund access password, etc. ..KEEP IT WRITTEN DOWN IN AN ENVELOPE and let only your spouse access that in case of an emergency. I encourage husband and wife to do transactions together in mutual funds etc. so that not only does your spouse know things, but is also used to doing it regularly. I find it difficult to believe that well qualified women do not even operate the ATM – saying ‘he does it’. You do not have to share the DETAILS of your will – but the location of the will should be known to your spouse, sibling, children, and the person whom your sharing the financial details.

Having covered who, what and what not lets see how to share the financial information…

HOW TO SHARE THE FINANCIAL INFO?

Having decided who you are going to speak with prepare a password protected word and excel document that summarizes your situation. Make sure you tell him where the information is lying. For me it is www.valueresearchonline.com and /or www.moneycontrol.com. Even the document that you make should be sent on email to your spouse so that you can access it wherever and whenever YOU want immaterial of where you are.  Hopefully your new financial confidante won’t have to access your data for many years to come but you want to leave them a map of where to find your treasure trove in case the need arises.

Talk about the comfort that your spouse has with this 3rd person and then explain what you want to do and why. If you have a good financial adviser you may want to inform him about this arrangement and create a comfort for him too. Ask the person if it is all right for you to share this info with them. Make the rules – can they talk to your adviser till something happens to you, do your children need to know that you know the financial details, is he at liberty to share details with your children, friends, etc. Remember, by sharing all this information you are asking them to take on a big responsibility maybe later on. They may be intimidated by the offer, it may take them a day to decide whether they want to do it. If is fine to put in a small remuneration – if the need arises, build it into your will.

Go through all of your information and make sure to answer their questions, if any. Explain the processes of how often you update your information, and where you store it. Then, ask if it would be all right to meet every 180 days or every year for a quick update. Ensure that you pay for travel, food, stay, if not give them a fee. It is also fine to go on a vacation with that person and use that as an opportunity for updating. Offer to be that ‘confidante’ for his finances – if it is appropriate.

Sharing financial information is a vital process but it could also be emotional. Choose who you share with carefully, very carefully, in fact.

Anybody who has done this already? How was the experience?

 

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  1. Thanks for a very informative article Sir. I have been doing this process for past 5 years by capturing all the details in an excel sheet. I sit down with my wife every month twice and run over why certain investments are made and what’s the current progress of those investments.

    I have a separate sheet where I have mapped Goals and MFs together and also track current completion of goals and what is yet to be achieved. I hope this enables her to handle the situation if one such arises.

    Next step is another 2 years away, when my daughter is 13 years old. I plan to sit down with my children and explain what I am doing for their future (leaving out the numbers). I am already preparing them to handle money by ensuring that they read your blog posts regularly (Ex: Conversations Overheard..)

  2. For MF, demat accounts, all you need is the monthly NSDL statement. As long as PAN #/email ID is correctly updated across all funds/demat account, this is a cinch.

    To avoid multiple passwords (to be passed on) set up a MFU account. Single password and single view for a starter. Will simplify withdrawal of funds in case of emergencies. And minimise bank accounts.

    Value Research/Money Control may be decent analysis tools, but they have their limitations unless you choose to invest in MF thru VR. Updation is required. And both of them do not support Bonds by way of valuation.

    Bottom line.. MFU is one point contact for MF..and your bank for Demat account. Two passwords (ok one more back up bank) and all info is available.

  3. Writing down your online passwords in Excel sheet is way too cumbersome and you can miss updating the passwords (if at all you want to write down your passwords!!!).

    If you are tech savvy, then I found the below approach to be completely latest, secure and foolproof (Can be free too :)).

    1. Create an account in lastpass.com (Its an online password manager, so that you don’t have to remember all the passwords. There are others like 1password etc).
    2. Get your wife/parents (who ever you want to leave your data to incase of emergency) to open their own lastpass account.
    3. Share your account to them with a couple of days of delay.
    4. In case of emergency, all they have to is request access to your account (from their account) and after the delay period, your data gets transferred to them; thats it. They have all the data about you whole life with them, including your mail accounts, financial details, ATM pin etc etc.

  4. QS are u here to plug Mfu? can’t this be done in Funds India? Or My Universe? or Scrip box?

    even Instaremedy is planning something on these lines. I have an awesome word document on ‘handing over’ to the next of heirs..one day i will find a sponsor and publish that…

  5. wordpress wordpressour blog with grey design does not zoom in to read, whereas the orange design zoom s in for us to read eazily on mobile.
    Pl help us read

  6. I am a long term investor. Prefer Direct Funds. Till now I used multiple log ins (may still need them to set up ISIP’s since MFU is lacking there.) Guess the other alternative would be to use the RTA -CAMS/FT/Karvy log ins. Three is better than 5 log ins I guess.

    If any of these sites provide me with Direct, I am more than happy to go with them. :>)

    Incidentally FundsIndia is the only site I saw that gives the correct returns for the growth and dividend option…dividend net of DDT.

    Cheers.

  7. Thanks for the article sir.
    I just started doing this for sometime now. I created google sheet where i listed all the details about my and my wife’s bank, insurance, MF folio, demat account, two wheeler , car insurance details, our property tax details, tneb login details etc and shared it with my wife.
    By this way, whenever i update the excel, she can view the changes immediately. Also planning to include one of my cousin (who is 12 yrs younger than me and i am 41 yrs old) to share the financial details. Just to make sure my only daughter gets some help if something happens to me and my wife simultaneously 🙂

  8. Me and my wife both know everything about our finances.

    1) Beginning of every month, we sit together and calculate how much money is in the bank, how much salary came, how much we should save and invest and what are our expected expenses and write it down in an excel sheet. We spend an hour or so doing the above.

    2) Both of us sit together and make the fund transfers to our savings accounts and make investments. Sometimes I ask her to do it so that she is familiar with the interface.

    3) Every day at end of day, we write down the day’s expenses in an excel sheet, right down to the last rupee. We both know how much is being spent by both of us at any given time. We have past expenses for several years and can identify patterns and project with reasonable accuracy into the future. If you ask us how much we spent on eating out in Feb of last year, we can tell you exactly!

    4) We discuss our long term goals (children’s education, travel, asset purchases, charity, etc…) regularly and make changes to investments accordingly.

    There is 100% transparency. It was very difficult to do this and not all couples can do it. It takes tremendous trust and maturity and supression of ego, to treat it as ‘our’ money rather than ‘your’ and ‘my’ money. Somehow we managed it and now we’re blissfully happy with our finances.

    It works for us because we cut each other some slack. When I buy one more gadget, my wife can never accept why it is needed, but she knows I like it or find it useful. Similarly when she buys more jewels or one more dress I can never understand why, but I understand that’s what makes her happy. In both cases, ‘we’ are spending ‘our’ money. It works as long as the money being spent is only a small portion of our budget.

    I thought I’ll share how we do it; maybe someone can use it, if it works for them.

  9. @Senthil: Good for you. But just wondering, how does the salary of the couple get split.

    I was thinking of the below buckets and % of each person’s salary
    30% for Investments (2 individual accounts, 1 joint account)
    30% for Family expenses (1 joint account)
    30% for Dependent elders (at individual level)
    10% for Self (at individual level)

  10. @EV Here is my split-up. This is very specific to my family, so each couple or family might come up with a budget that’s suited to them and iterate on it several times before they settle on something that works well.

    60% goes to mutual funds (long term goals, 15+ years)
    15% goes to savings accounts (short and medium term goals and emergency fund).
    15% constitutes expenses for self, spouse and child.
    8% goes to house expenses. We live with my parents and common expenses are shared. I pay the bulk and parents pay the remaining.
    2% goes to wife’s parents. They’re still earning and live in a small town. Even this small percentage makes a difference.

    Above split might look a bit extreme to some and not feasible. But we have favorable situation (part of it happened, and part of it was created by us)
    – We have no debt. Nothing goes to EMI
    – We live with parents in ancestral home. So, no rent or house loan EMI
    – Both our parents are still working. We don’t, yet, have to support any dependent elders financially

    Again, the ratios themselves don’t matter too much as long as it is acceptable to both of us and works for the family. But I would suggest keeping debt payments down to minimum or ZERO and maximize investments.

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