I Was Financially Unprepared to Become a Widow
In 2001, I'd been married 16 years and had two children, aged 8 and 11. My husband loved Colorado, so we moved there in June 2000.
A year later, he died in an accident and, in seconds, my world turned upside down. I not only had to pick up the pieces mentally and emotionally, but financial considerations loomed even larger. When a spouse dies, bills don't go away and new ones put more financial pressure on the partner left behind.
Prior to Gary's death, we weren't rich. He was a delivery truck driver and part-time production worker, earning $34,000 a year. I was a freelance writer and a customer service rep for an insurance company, earning $20,000 a year. Ironically, on the day he died, it was my first day at a new job. We didn't own a house and had just signed a renewal on our apartment. I was solely responsible now, so all paperwork had to be changed to my name. I downsized, moving us into a smaller apartment.
Surviving widowhood took lots of change. I didn't have time to grieve right away because I had to make financial decisions. We didn't have life insurance, but we had an accidental death policy through Gary's job. Burial arrangements took center stage. I had to decide on burial or cremation. Thankfully, the policy paid for the coffin, headstone, and other funeral expenses, leaving me with $40,000 to cover bills and pay off debts. I also put money into savings. We didn't have a will, thinking we were too young for one. WRONG! You're never too young.
It took five years before I felt financially settled. Until then, I concentrated on the routine of living. Paying bills, feeding the kids, and keeping us clothed took priority. I saved where I could and increased my skills. I quit the insurance company and freelanced full time. I also returned to college to pursue a degree. I've since remarried, and my personal income averages $35,000 per year.
There are things I wish I'd known about finances before widowhood. I should've prepared better. Don't think this can't happen to you. It can. Here are some things you can do to make sure you're prepared in case your spouse unexpectedly dies:
* Examine your finances.
In order to prepare for the future and protect your assets, get an accurate assessment of your current financial situation. Sit down with your spouse and list your assets and liabilities. Note any outstanding debts and make an inventory of property you own. Draw up a financial plan of action or seek help from a personal financial planner. Understanding the current state of your finances is essential for ensuring your family is protected against unexpected situations.
- Purchase life insurance.
Life insurance is important because it provides a financial safety net. With life insurance, you can cover burial expenses, pay outstanding bills, and keep money in a savings or other investment account to ensure financial stability for your family. Consult a life insurance agent to discuss your family's needs and receive advice about which policy is best for you.
- Draw up a will.
A will is important because it's a legal document that outlines how your personal and financial affairs will be handled once you pass on. Without a will, there can be confusion or conflict over how assets are managed. If you don't have a will, the state you reside in can decide how to distribute your assets. Contact an attorney to draw up a will or visit a site like Legal Zoom to help you develop a will that is legal in your state.
- Plan burial arrangements.
The time to plan burial arrangements is before you need them. Discuss your preferences, such as burial or cremation. Determine where interment will take place. Finally, set up a financial plan to pay for all related expenses with a funeral contract. According to the National Funeral Directors Association, the average burial costs about $6,560, while the Cremation Research Council reports the average cost of cremation is $1,110 (not including viewing, visitation, or ceremony).
These are uncomfortable subjects, but they are necessary to address. The loss of a loved one is traumatic. Don't be surprised by loose financial ends at a vulnerable time in your life. Plan ahead to prevent headaches later.