There are unique challenges families face during a second marriage. One of the biggest challenges is determining how finances will be handled in the blended family. These challenges may be exacerbated if the families are from different economic backgrounds.
They may also have different ideas on what things classify as needs and wants, especially when it comes to purchasing things for children. In a new blended marriage, both partners may find financial rules agreed upon with their previous spouse do not sit well with their current spouse.
Single parents are able to make all of the financial rules without consulting with anyone when it comes to family finances. Now, both individuals need to be able to communicate with each other while understanding their new family dynamic. Here are some tips for merging finances in a blended family.
Learning to Communicate Effectively about Finances
Honest communication is key to successfully blending the finances of two families. Each partner should also be upfront about the debts they may have.
A couple should discuss how they are going to pay off credit card debt and student loan debt. Discussing plans to have separate credit cards and bank accounts or handle their finances jointly is a must-do.
They will need to discuss how to handle any number of unexpected emergencies that can occur. Whether it is borrowing from family or utilizing online short term loans to get over the unexpected financial hardship, it is imperative both sides agree so a go-forward plan is implemented in a timely manner. Here are some other things that should be discussed
• Each spouse should lay out the assets they have. This includes savings, investments, vehicles, homes, IRA plans, 401(k)s, etc. Determine which of these investments or savings can pay off the debt.
• Learn each other’s spending habits. The best-case scenario would be where both individuals had similar habits. If this is not the case, discuss how each one can adjust to the other. Try to understand the reasons why one spouse may want to spend or save more than the other.
• All dirty laundry should be out in the open. Bankruptcies, failure to pay credit cards, and tax issues should be openly discussed. Having anything hidden that comes to light later will damage the trust of the marriage.
• Take the time to discuss how each spouse’s parents handled money. Understand each other’s views on money. Is it seen as a tool or a burden?
Establish Clear Household Financial Rules and Keep Them Consistent
Parents had financial rules they applied to themselves and to their children. So, in a blended family, a new set of financial rules must be established, and these have to be adhered to consistently. Some tips in doing this include:
1. Involve the entire family in financial conversations. It’s best to shy away from the word “budget” as it can have a negative connotation. However, talk about developing a family spending plan. Talk about expenses important to the family. Talk about easy ways to cut back on items that may not be as important.
2. Discuss financial goals as a family. Is there a family vacation in the future? Make a bulletin board that allows your family to highlight its financial goals. Daily reminding yourself and your children about big-picture goals make smaller sacrifices seem a lot easier.
3. Make saving and spending a family project. Let’s say as a family you decide to purchase a new computer or spend the day at a theme park. Ensure every member of your family puts money into a jar to save for the major purchase or the vacation day.
Children will see the savings grow, and they will be able to visualize the family’s financial plan. Once there’s enough money put aside, then go comparison shopping together. This will help all in the family appreciate the value of getting the biggest bang for their buck.
Working with the Co-parents
Children of blended families typically have a second birth parent. Depending on custody arrangements, the child may also spend a portion of their time in another household. This household may have its own financial rules.
To successfully merge finances in a blended family, parents will need to talk to their co-parent and try to work together. The more consistent the financial rules a child has in their life, the less confusion they will face.
Other financial issues that impact blended families include things like child support and spousal support. As a result, legal documents like wills and trust will need to be adjusted to guarantee assets go to the right beneficiary.
Having all of the legal documents in place makes things financially secure and clear for everyone involved. Adult children also need to be considered, especially if they occasionally come back to mom or dad for money.
The partners of the second marriage and the co-parent of the adult child should clearly discuss how they are going to provide financial help. It is surprising how quickly adult children looking for money can torpedo a second marriage.
Finally, with these tips for merging finances in a blended family, it will be easier to overcome some of the challenges. With communication, planning and consistent financial rules, your family will enjoy long-term financial success. Read on to find out the key to a successful blended family.
