INSIDE: If you’re getting a second marriage and kids are in the mix, you and your partner need to be serious about money. Here are some tips to help you start thinking about blended family finance.
Conversations about money can feel awkward and complicated, but they’re sooooo important. This applies to couples considering marriage or moving in together. This applies to parents-to-be trying to budget for parental leave. And be particularly This applies to couples who come together to create a blended family.
Even if you don’t want to talk about money with your partner, these conversations should be had before making any major financial commitments. Talking about money early and often can help you avoid uncomfortable and costly financial situations in the future.
Fundamental questions to help mixed families navigate their finances
Reuniting a family can be a lovely experience, but when it comes to mixing up finances, things can get complicated. It is important that you and your partner sit down and discuss the important questions such as:
- How do you divide household expenses? Will it be a 50/50 split or will you split the expenses based on how much money each of you make?
- How are you going to pay for your children’s expenses? Do you divide it up evenly or do it according to how many children each of you brings into the blended family?
- Would you like to opt for a common bank account or will you have separate bank accounts?
- How are joint family expenses paid? A common credit card?
- Do the children get any allowances? How do you teach your kids money?
- What are your common long-term financial goals? Do you want to save enough to help your kids pay for college? Do you focus on early retirement? Or do you have a lot of collective debt that you want to pay off?
- Do any of you have a financial obligation to your ex?
- In need of a financial planner to help you understand your big financial picture?
How to create a mixed family budget
After you’ve discussed the answers to these questions, you can use this information to create a mixed family budget. This can be done in three easy steps on a sheet of paper or using a spreadsheet.
- List how much income you are bringing in each month
- List your family’s fixed (rent, mortgage, insurance, alimony) and variable expenses (food, activities, clothes shopping).
- Subtract your expenses from your income. When you have money to spare, plan to save or invest. If you are spending more than you are taking in, you will need to adjust your spending.
More tips about different types of budgets and more information on how to create a budget Click here.
When it comes to your children, there is one more topic you and your partner can discuss: grant. Are you both in the process of giving child benefit? If yes, how much? And from what age would you like to give your child a grant?
Giving pocket money to your children can teach them money management skills. Once your children are old enough to count, you can start introducing the terms money and pocket money. This gives you the opportunity to discuss spending, saving and giving.
For older children, giving allowances can be a great way to replace them if they are constantly asking for money. Host a family reunion and determine how much you will give to each child each month. If they get different amounts, explain why. This allows them to plan and save their social trips and determine how much pocket money they have available for shopping trips.
Pay for college
College is expensive, especially if you have multiple children. If you and your spouse can afford it, and you decide that paying for college is a major financial goal, then you need to develop a game plan on how to achieve it.
Will you be paying for your children’s entire college experience – tuition, housing, transportation, food, and living expenses? Or are you willing to contribute a certain lump sum just for the tuition fees?
Will you both contribute to all the resources of the children’s college or will you focus solely on your own children? Will Your Exes Add To Your Kids’ College Savings?
You can also involve your children in these conversations. Set up regularly family meeting to discuss financial issues like college. Discuss the cost of the tuition fees and whether or not they need to receive tuition grants.
A family reunion can also be a great opportunity to talk to your children about student loan debt and the impact it can have on their future. You can also talk about the benefits of a scholarship and how it can help you avoid additional credit.
How to have a successful family reunion
Schedule a weekly family reunion or once a month, whichever is best for your situation. Outline what you will be talking about and have each family member contribute to the conversation. You can review every meeting with a review of your previous meeting and all unresolved issues. Just as it is necessary for you and your partner to keep the dialogue open, it is also important to make your children feel like they are part of the conversation.
The estate planning process involves preparing to manage your estate (your home and other assets) after your death. When it comes to financial topics that you don’t want to talk about, estate planning is likely high on the list. For starters, most people struggle to just talk about money, but add the subject of mortality and you have a real party starter!
While it’s not a favorite topic, it is important to be prepared for any situation, especially if you have children. When discussing your estate plan, you will want to discuss topics such as:
- Do any of you have a will?
- Do you have life insurance?
- Have you assigned an executor to your estate?
- Have you discussed your wishes with your relatives?
- How would you like to share your wealth among your children when you and your spouse are away?
- Would you like to set up a foundation for your children?
- Are your exes entitled to your finances if they are the surviving spouse of that previous relationship?
If you and your partner don’t know where to start with estate planning or are struggling, consider hiring an estate planning attorney to come up with a comprehensive estate plan.
Are you ready for your first family reunion?
To be prepared for all of the different financial situations you may face as a blended family, from allowance to college to death, speaking as soon as possible is important. Start by setting up a regular family finance meeting and choosing a topic for the agenda. Grab it and ask the tough questions. The best way to avoid financial disputes in the future is to speak early and often.
– From Jessica Martel