Managing finances in a blended family can be complex and sensitive. Balancing multiple individuals' needs, expectations, and financial backgrounds requires open communication, trust, and careful planning.
At a free virtual event for newsletter subscribers, we hosted national experts who shared tips for success in financial management in a blended family. Below is a recording of the event, which doubled as a special edition to the Modern Husbands Podcast.
One of the event attendees was Rahkim Sabree. Rahkim is a financial therapist specializing in financial trauma, which he writes about regularly in his newsletter Overcoming Financial Trauma. Rahkim is in a blended family himself.
According to Rahkim, "The (event) presentation was very insightful. I haven't previously considered how being part of a blended family really impacted my finances or how behaviors and beliefs about money impact blended families.
Outside of concepts like financial infidelity and financial incest, the blending of financial backgrounds and foundations can make for balance in blended families or chaos.
My own experiences in a blended family have shown me experiences and exposed me to things financially that I hadn't experienced (or known existed) previously.
In my own work in financial therapy and financial counseling, I've seen examples of this clash in husband and wife relationships that aren't in blended families so to view this phenomenon from a blended family lens is fascinating."
As you can imagine, there are unique approaches to tackling the topic of money for every blended family. Crafting a nuanced plan requires deep consideration of the financial situations of all the parties involved, amongst other factors. With that said, there are basic lessons blended families can learn.
Open and Early Communication is Key
Effective communication is the cornerstone of any successful relationship, and it's vital when managing money in a blended family. Start with honest conversations about your financial goals, priorities, and concerns before marriage. This is particularly important if children are involved.
Take the time to watch the recording of the event. Ed Coambs stresses that when having a financially intimate conversation, it is essential to face each other, look into each other's eyes, and remember that you are each human being and that these conversations can be challenging for both.
Establish Clear Financial Roles and Responsibilities
Define who will be responsible for what aspects of the family's finances. This may include budgeting, bill payments, managing investments, and handling joint expenses. Other families could enter the relationship with more complex financial circumstances or deep financial trauma. In these cases, it could make sense to get a prenup.
I wrote about this in my OpEd for MarketWatch: Why a prenup could be the right prescription to keep a blended family healthy
Build a Budgeting Plan
Developing a comprehensive budget is crucial for a blended family. Include all sources of income, individual and joint expenses, savings, and investment goals. Be transparent about each person's financial obligations and contributions. This collaborative approach fosters a sense of fairness and unity.
Complex financial circumstances need to be simplified to be manageable. We recommend Tiller for folks looking for a tool to manage your daily finances.
Joint Accounts
You may have seen in the news or in our previous post that there is clear evidence that married couples with joint bank accounts not only have better relationships but fight less over money and feel better about how household finances are handled. One of the leading research authors is also a Modern Husbands Advisory Board Member, Dr. Jenny G. Olson.
It is essential to point out that research participants were either engaged to be married for the first time or married for the first time. These findings are valid for second marriages.
Separate Accounts
There could be good reasons for keeping finances entirely separate. Once again, every relationship is different, so these reasons may not be the case in your relationship:
Autonomy and Independence
Reduced Financial Conflict
Clearer Accountability
Avoidance of Financial Baggage
Personal Debts and Obligations from Previous Marriages
Clearer Taxation and Legal Implications
Estate Planning and Inheritance
Hybrid Approach: Yours, Mine, and Ours
Setting up a joint account for common expenses like housing, groceries, utilities, and children's needs can simplify financial transactions and prevent disputes. Ensure that all parties involved have access to the account and establish guidelines for how funds will be allocated.
Learn more about how to do this in our previous post How Should Money Be Split in a Marriage.
Plan for Child-Related Expenses
Blended families often involve children from previous relationships. Discuss and agree on handling expenses related to education, extracurricular activities, medical needs, and other essentials. Consider creating a dedicated fund for these costs to cover them adequately.
Seek Professional Advice
Consider consulting an expert specializing in blended family finances who is a financial therapist, financial planner, and prenuptial agreement specialist focusing on mediation. They can provide tailored guidance and help you navigate complex financial matters like estate planning, prenuptial agreements, and tax implications.
Can Second Marriages Work? Yes
Managing money in a blended family requires patience, understanding, and a commitment to working together. You can build a solid foundation for financial success and harmony within your blended family by fostering open communication, establishing clear financial roles, and setting shared goals.
A special thank you to two Modern Husbands Advisory Board Members, Ed Coambs and Mikel Van Cleve sharing their wisdom at our event. Please join me in subscribing to the Healthy Love and Money newsletter and podcast.
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