Under normal circumstances, our financial health can be challenging but, for some families after a loved one’s death, a decrease in income can cause an added burden to the grieving process.
When a child dies, both parents may miss extended periods of time at work and, if no benefits exist, savings may dwindle, credit cards may be used to survive, and the family’s debt might steadily grow.
After the death of a spouse, the financial picture in a household changes. If you and your spouse were both receiving social security, your benefits may be considerably reduced. Maybe there were two incomes. Pensions may now cease. Consequently, you, as the surviving spouse, find yourself in a difficult position. You may feel it wise to sell the house, downsize to a different location, or perhaps move in with children. If you move, you may feel burdened by adjusting to the loss of your loved one’s presence in a strange place.
When a young parent dies, the surviving parent may now be the sole caretaker of many children. The income of the surviving parent is not enough to meet the expenses. Now the option becomes whether to sell the house and move to an apartment. Uprooting children at a very vulnerable time in their life only compounds their grief, as they may additionally have to deal with the loss of their friends, teachers and classmates.
If you are not financially savvy, this is the time to learn how to handle finances to your benefit. A short-term financial education now is one of the most important investments you can make. I know too many people who have endured great financial hardship, in addition to the death of their loved one, because they were so overwrought with grief that bills were left unpaid and their credit history was ruined. Some eventually visited the bankruptcy court. Don’t let this happen to you. Do whatever is necessary to reduce debt to free you up from unnecessary burdens. Therefore, if you need to take extended time away from work, you will have the ability to do so. It is when you feel that you cannot that additional pressure can build. Develop a plan that will give you as many financial options as possible.
Below are a number of excellent agencies that can help you better understand your financial options after a loved one’s death:
— Social Security Administration. This federal agency will answer questions about you and your spouse’s benefits and if you are eligible for monies. Widows and widowers over the age of 62 can collect social security benefits and, even after one spouse has died, benefits, although decreased, are still paid to the surviving spouse. Additionally, spouses younger than 62 with surviving children and spouses who are disabled become eligible for assistance. Contact them at (800) 772-1213 or at their website, www.ssa.gov, to locate the office closest to you.
— For those who have experienced the murder of a loved one, each state offers a program known as a Crime Victim’s Board. These state agencies help provide funding to serve the needs of the surviving family members, offering them mental health counseling, funeral expenses and other covered expenses. You can learn whether you are eligible to receive benefits by contacting your district attorney or police department where the crime was committed. A Crime Victim/Witness Advocate will help you complete the necessary paperwork.
As soon as possible after the funeral, have your financial situation reviewed by a trusted certified financial planner. Reduce all debt by as much as you can. Pay off the credit cards with the highest interest first, then work toward paying off the remainder.
You are dealing with enough pressure now. Eliminating the financial pressure will help you recover with fewer burdens. In addition to reducing credit card payments, you may want to restructure your budget eliminating purchases that are unneeded.
If you are in a dire situation, perhaps your husband has died and you are the sole breadwinner for three children, it may be wise to consider one personal loan to pay off everything, thus having one manageable bill each month. An effective strategy is to apply for the loan while you are still earning your current income. Don’t wait until months down the road when you are well into your grieving and may not have the stamina to investigate your options.
At that point, you may have had to take a lesser job, with a lower income, because you couldn’t handle the pressure. Getting the loan at this point may be more difficult than had you applied immediately after the death. And, if you have this extra money or even a credit line, you will open up your options. You will have the ability to take a different job by choice instead of necessity, to be around the children more, or to pay for the babysitter from 3:00-6:00 when they arrive home from school and you are still working.
Now you may ask, “How will I possibly have the energy to explore loans immediately following my spouse’s, parent’s or child’s death?” There is a bubble that surrounds you - almost a fog. That’s the protective barrier that gives us the incredible strength to plan the funeral, handle all the details and make sure everyone else is okay. Well, use that protection to keep your focus on your money and to learn exactly where you stand. You cannot make wise decisions when you don’t have the true picture. Use this opportunity to educate yourself and take charge now, even if you need a financially savvy friend or relative for a second opinion.
— If you have substantial funds and little knowledge about how to handle them, or if your spouse’s or parent’s Last Will and Testament provided you with a large insurance policy or estate, it’s time to speak with an experienced professional. You need detailed advice on where to invest such monies and the tax ramifications of your decisions. The National Association of Personal Financial Advisors is an organization which recommends “fee only” Certified Financial Planners (CFAs) who work for you.
Some CFAs don’t charge a fee, but you indirectly pay for their advice when you invest in the stocks, bonds and mutual funds of the companies they endorse, who in turn pay them a hefty commission. Trouble is, those funds may not be doing as well as others and, because the CFA doesn’t receive any commission from the other, more favorable funds, they will instead sway you to their own funds. Consequently, a “fee only” CFA is where you want to go. Contact the National Association of Professional Financial Advisors at (800) 366-2732 or visit their website, www.napfa.org, to find a “fee only” professional who can attend your financial needs.
— He is known as the “Consumer Warrior” and his nationally syndicated radio show gives outstanding advice on all financial matters. Clark Howard is a wealth of knowledge who will help educate you on basic investing and money management. His books include Consumer Survival Kit III and Get Clark Smart. Visit his website, www.clarkhoward.com, to locate your local radio station and to give you the most comprehensive look at finance in a down-to-earth manner you will understand.
Whatever financial decisions you make, always build into each as much flexibility as possible. Getting rid of as much debt as possible will decrease your financial burden and free you from feeling trapped while trying to grieve at the same time.
