Organizing all financial documents and keeping them in one place becomes critical to take further steps. This becomes all the more essential if you have till now not been involved in financial decisions of the family.
Losing your spouse is a highly challenging and stressful situation. It can be very difficult to cope with the emotional loss. However, dealing with the financial challenges which accompany this loss can compound the pain of the loss. A widow should understand her financial position, organize documentation, initiate claims, revisit her finance plan and take care of logistics in financial payments. It is important to take one step at a time instead of rushing into any financial decision.
Women have a longer life expectancy when compared to men. As a result, in most cases, a woman loses her husband earlier than it being the other way around. When a woman loses her husband, it is not only emotionally stressful, but also becomes financially challenging. Especially if she has not been exposed to taking financial decisions. The involvement of most women in financial matters is restricted to deciding the household budget. As a result, when a crisis situation like death of the spouse arises, they are either not aware or scared to take charge of finances. Here are some things you should take care of, if you have been widowed recently.
1. Understand your financial position: Find out how much you have in assets and liabilities, that is, understand your financial position before you take any financial decision. It is important to know this first. Collect bank statements, mutual fund and stock statements, insurance policies and other investment documentation for this purpose.
2. Organize documentation: Organizing all financial documents and keeping them in one place becomes critical to take further steps. This becomes all the more essential if you have till now not been involved in financial decisions of the family.
3. Initiate claims: Has your husband left behind a Will? If there is a Will, things become much simpler. You can get the help of a lawyer and start the probate process. However, if there is no Will, things can become a bit complex. You will need to obtain the succession certificate in line with inheritance laws. You should seek the help of a qualified lawyer in this case as well. Thereafter, you should initiate claims from various institutions like life insurance companies, provident fund office etc. These things take time, but it is important to not delay action from your side.
4. Take one step at a time: Taking quick decisions is never advisable, especially when you are under stress in a situation like this. Do not take any major financial decisions, even if you are well versed with finances. It is always better to consider options and not rush into things.
5. Replacement of income loss: If your husband was working at the time of death, you must consider how to replace this income loss. You can think of taking a full time job if you were not working earlier. If you are already working, consider a freelancing or part time job during weekends to boost the family’s income.
6. Take care of payment logistics: If your husband was responsible for making all utility payments, investments etc, you may not know where to begin. Make a list of all the regular payments to be made and then decide how to manage the logistics of these payments. Automate payments wherever possible.
7. Management of Corpus: If your husband has left behind a corpus for you, it becomes important to invest this efficiently to fulfil your financial needs. Follow the principle of diversification and keep asset allocation in mind depending on your risk profile and goals. For example, say a 40 year old widow with a conservative risk profile is left behind with Rs. 50 lakhs. She can invest this in fixed deposits with monthly interest payment option. At an assumed post tax interest rate of 7% per annum, she will earn approximately Rs. 29,000 per month. If she uses Rs. 15,000 of this amount towards monthly expenses (assuming she has other sources of income as well), the surplus of Rs. 14,000 can be invested in 2 diversified equity mutual funds for the long term. Deciding how to invest and manage the corpus depends on your individual situation and risk profile.
8. Revisit your financial plan: After you have taken care of the initial To-Dos, you must revisit your financial plan. Find out if there is a sufficient emergency corpus. If the assets left behind by your husband in terms of corpus are insufficient, you are working and have dependents, then you should consider taking a sufficient life cover. Take a health insurance protection to cover the risk of rising medical costs. Map your goals to the investments you currently have. Goal based investments help in reducing financial stress. Understand the risk level of the portfolio left behind by your husband and align it if necessary. Also, make a Will for your assets.
9. Consider relocation, if necessary: Sometimes, relocation becomes necessary to a less expensive place or to save money. Although this is not an easy decision, especially if you have children who are studying, this can be considered if you are in a financial crunch.
Dealing with the death of a loved one is difficult, very difficult. But taking one step at a time can help to ease financial stress. One can consider taking the help of a professional, if necessary. Women should actively participate in financial decisions and actions of the family and should be aware of the financial situation at all times, in order to be prepared for such unfortunate events in life. '
The author can be reached at firstname.lastname@example.org. The above are suggestions only and should not be construed as financial advice.
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .