Uniting two families into one brings many joyful complexities, from the dynamics of living under one roof as a newly-minted stepfamily, to negotiating differing parenting styles. And at the forefront of those complexities may be the unique challenges of marrying two financial backgrounds. As a step-parent, you may suddenly be involved in budgeting for your step-children or become financially intertwined with your spouse’s ex—for better or for worse.
Some of the most complex financial issues you’ll face with a blended family include saving for higher education, figuring out shared tax liabilities and updating your estate plans. And of course you’ll be managing day-to-day expenses, as well as birthday gifts, family vacations, school uniforms and extracurricular activities.
Having the Big Conversation About Money
Since talking about money can be emotional, even contentious, experts recommend that couples discuss their finances—from soup to nuts—prior to marriage. Talk about how you handle budgeting and savings, your long-term financial goals, and any debts you’re carrying. Talk about all the expenses related to your kids, from college savings to clothing to your Sunday night movie night tradition. Put it all on the table. After all, discovering that you have different spending styles or hiding spending from one another can wreak havoc on a marriage.
Next, create a financial plan together. Discuss everything from how you’ll pay bills—evenly or by percentage?—to how you’ll save up for vacation. Having an agreed-upon plan can help minimize financial stress from the get-go. Feel free to seek advice from a neutral third party, such as a financial advisor, certified financial planner or estate planning attorney, as doing so can nip problems in the bud. “I’ve found that having private conversations with each of the spouses helps bring out the true wishes of the individuals,” says Thomas Rindahl, a financial advisor of TruWest Wealth Management Services in Scottsdale, AZ. Once you each have an idea of your money management style and goal, however, bring it back to the family table to talk about, along with the answer to these important questions.
1
Should we combine some or all of our accounts?
Whether or not to combine assets is likely one of the first tough financial questions you’ll tackle as a new couple, and there’s no right answer. Monica Dwyer, a certified divorce financial analyst and wealth advisor at Harvest Financial Advisors in West Chester, OH, says the decision depends on each individual’s income and comfort level with spending.
For example, if you merge accounts but earn significantly less than your partner, you may feel like you have to justify your purchases or stick to an allowance. You may decide instead to have a shared pot of money plus your own cash.
2
Who pays which bills?
Depending on how many children you each have and how old they are, you may split everything equally. Or you might pay for household expenses like the mortgage and groceries while your spouse contributes to college savings and extracurricular activities for his kids—or vice versa.
Some couples who marry when the children are very young may take on all their expenses, Dwyer says. But “not everyone can do that, and not everyone can be expected to do that,” she points out.
3
Do we spend equally on each child?
Your financial obligations as a stepparent will need to be decided between you and your spouse, factoring in how much your stepchildren’s other parent is able and willing to contribute. A big difference in the level of child support, for example, could put things off balance.
But the overarching goal is to avoid money causing resentment amongst stepsiblings. Extra care should be taken if you and your new spouse have children together, or if one partner has much older children from a prior marriage.
“I think you have to be really sensitive to treating kids fairly,” Dwyer says. “There’s always going to be some kind of unfairness, but if parents are kind of cognizant and try to make it as fair as possible, that helps.”
4
Do your wills and estate plans match your intentions?
Make sure to update your estate plan, both by discussing it with your partner and and then actually drawing up any new legal documents required. You’ll want to make sure that all of your accounts, such as your retirement plans and life insurance policies, are updated with the beneficiaries you want to designate. “What people fail to do most of the time is to line up all legal stuff with what their intentions are, and that can be the worst situation,” Dwyer says. “It can tear families apart.”
In the end, every blended family is unique. What works for you, your new spouse, and your children and stepchildren may not be what’s right for another family. But having honest conversations about your needs and what you’re comfortable contributing, as well as following through on any legal to-dos, can help alleviate some of the stress and frustration of blending your money.
Emily Long is a freelance writer and editor based in Salt Lake City, UT. Her work has appeared on NBC News, Lifehacker and Wirecutter.
Learn more about joint accounts for the married-again.