Strategies for Blended Family Finances

For all of the advantages that a second marriage can bring to your financial life, it can also bring its fair share of challenges. If you and your new spouse need to work out your finances, then you’ll want to consider the following three points as you work to blend your new family’s finances together. 

1. Start with a Frank but Tactful Discussion

Lots of factors come into play when it comes to blending finances, including the baggage you might have from having had a yucky first marriage and/ or the debt you carry from that marriage. You’ll additionally need to deal with the debt you may have incurred when you were single.

According to the US News and World Report, it’s for these and a host of other reasons that blended-family couples need to sit down and talk about money expectations. For example, you may have a different idea about paying allowance than your new spouse does. You may also have issues trusting your new spouse because of the emotional baggage you have around money from your previous relationship.

Finally, you’ll have to decide how you’re going to deal with “new” money accounts that the two of you share, like when you’re applying for loans online or thinking about getting a credit card together.

You’ll have to ask yourself whose account the money will go into, if you’ll set up the account with both names on it, how you’ll both spend that money, and how and/or who will pay the money back. It’s not realistic nor helpful to assume that you and your new spouse will deal with these types of financial decisions in the same way that you and your old spouse did. It’s imperative that you put new “rules for the road” in place before you get to this point.

Aside from these issues, there are legal issues to contend with, like child and spousal support, student loan obligations and other financial issues that sometimes, only a financial planner can help you sort out. It is impossible to make solid financial decisions for your new marriage without these types of discussions. 

2. Unbalanced Finances

As an article on CNN Money points out, you and your spouse could have drastically different financial resources. One spouse could make more money than the other. One could embrace budgeting and have a habit of planning his/her finances down to the last penny. The other one may have a more relaxed approach to their expenses. The potential for conflict gets turned up in situations like these. Outside influences, like who gets what asset when the new spouse dies, also plays a role. A trust can protect the assets of both spouses.

Finally, just because one spouse doesn’t look at money with the same scrutiny as the other spouse does doesn’t mean that they shouldn’t decide on their finances together. Blended-family couples should work on their budgets together to see where all the money is going. It’s harder to argue about what gets paid and what doesn’t when each bill and expense and each asset is in front of you on a spreadsheet in black and white.

3. Expect the Process to Take Time

It’s tempting to think that your first financial discussion will be your last. However, that’s not only not realistic, it’s not helpful. It puts a lot of pressure on you as a couple to try to rush the process, and according to Kiplinger, it’s okay to take a while to work these issues out. Honesty, a sense of fair play and clear-headedness win the day when it comes to blending your finances.

It’s additionally critical for you as a couple to define the difference between being equitable and being equal. At times, you and your kids will need more. At other times the reverse will be true and your spouse and his/her family will require more.

In these circumstances, you may also find that you need to discuss finances as a family. This will cut down on one set of kids thinking that the other gets more.

It’s also important that your children see how money is made and to encourage them to earn their own money when they’re old enough. Too many families don’t talk about money at all, an issue that become exacerbated when two different families are trying to blend into one.Final Thoughts

Blending two families into one comes with its share of unique challenges, including ones pertaining to money. The best way to deal with these issues is to discuss the state of your money with each other, with a financial planner and with your kids if the situation merits it.

Adam Hansen