Finances in a Blended Marriage - How to Avoid Money Potholes
Second marriages have their own challenges and potholes, particularly concerning money, and especially when step-kids are involved. Any time a family is blended together the potential exists for conflict. And financial conflict is always the worst kind in any relationship. Indeed, money differences may well have been responsible for the breakup of the first marriage. When step-kids enter the picture the potholes get even deeper: Who pays for what? Whose kids are costing more? Is that our dental bill, your dental bill? Mine? Did your kid wreck the car, or did our kid wreck the car? These are all money issues, so blended families must have a system for sorting out who is responsible, and when. This is no small thing; According to the Stepfamily Association of America, 43% of unions are a second marriage for at least one partner, and about 65% of remarriages involve kids. "Blending kids, ex-spouses, money and investment styles--each one of them requires its own strategy," says Ruth Hayden, a St. Paul financial consultant, and author of For Richer, Not Poorer: The Money Book for Couples*. "That's how big a challenge a second marriage is." So money styles seems to be a place to start to unravel the knot of financially blended families. But is it? It may be more important to look first at whatever money issues are already on the books as the marriage begins. Particularly if there are different styles of handling finances, this is a critical issue to discover well before the nuptials. There are at least four different money styles, with overlap on most: there are savers, those who insist on having money set aside at all times; there are spenders, those who believe that if there are checks in the checkbook they still have money, and care little for cash on hand; there are the so-called money-effete, those who don't know about money and don't care to, because it's beneath them to deal with it; and there are those who combine at least two of the preceding, depending on their income level or fear of poverty. But where step-kids are concerned, money styles are only magnified, simply because financial issues themselves become more critical. It's estimated that it will require at least $250,000 to raise one child through college age in this country. Multiply that by two, or three or four and... You get the picture. Now imagine that only two of those four kids are your biological children, that the other two are part and parcel of your second marriage. Here are some tips on how to avoid the inevitable tension that can arise over where all that money is coming from, and where it's going day by day. 1. Make sure you understand who has what money style. Certain styles simply will not mix: a spender will have a tough time with a saver, for instance; a money-effete will have no interest in paying bills, so the other spouse had better be prepared to do it. Regardless of which stylistic tensions there are, when you're spending money on 'their kid' (see below) the irritation can come out of nowhere, causing incidents that can corrode the marriage. Knowing ahead of time what to expect helps ease the tension. 2. Make every effort to think of them as 'our kids'. This exercise will be difficult at first, for you and the kids, but it's more important than it appears. For a number of reasons, start using that terminology right away. The other side of this is to avoid the phrase 'your kid' at all cost. 'See what your kid did this time?', or worse, 'See how much 'your kid is costing us?' is a deadly way to start a conversation. When the child has caused a financial loss -- wrecked car, damaged property, lost personal item, dentures, private tutor, cello lessons, any kind of unexpected cash outlay, referring to the child in those terms is unacceptable. Use this occasion for the opportunity it is: Instead of 'your kid', hasten to say 'our daughter/son'. Your new spouse will be grateful for the consideration. 3. Avoid keeping score. Kids are an extremely expensive hobby. This is just reality; children cost a lot of money, and the costs seem to escalate the older they get. Step-parents who, subconsciously or otherwise, keep score of the overall costs are heading for a major disappointment. The ability to let go of financial reality, which will seem chaotic at times, is essential to family harmony. On the other hand, if the kids are old enough to understand, it isn't inappropriate to bring them into the discussion any time a major financial event has occurred. Indeed, it's detrimental to hide those events from them. When I was growing up, the second of ten kids, money was never discussed in our house, perhaps because there was little to discuss, perhaps because the issue was considered for adults only. But we do our kids--and step-kids -- a disservice withholding financial advice and understanding that will lead to their own financial literacy. 4. Don't keep secret cash or hidden accounts from your new spouse. This is a difficult adjustment for many people, especially those who consider themselves more sophisticated about money than their partner, or just more financially literate. The temptation is to hold back a certain part of our income or assets until the new relationship is established, and then possibly open up. This policy is fraught with peril. At what point do we decide to tell our new spouse about that private account? How do we tell them? And here's a major challenge: what if one of 'your kids' needs something in the meantime, and money appears to be tight? If the tendency is to want such protection, especially against possible encroachment from step-kids, there are prenuptial agreements to address that. Otherwise, full disclosure is always the best policy, even if it means taking the advice in number 5 below. 5. It may be a good idea to keep separate accounts. This works for a lot of blended families. Decide ahead of the marriage who pays for what; who is responsible for which children; how each major expense and financial responsibility will be assigned and handled. Depending on income, a simple sliding scale may work just fine. Blending families doesn't necessarily mean blending bank accounts. The only drawback to this arrangement is, that if one of the spouses lacks money handling skills, they may have to acquire them. Blending families is never easy. Money issues aren't either. The potential for both to arrive unannounced is always there, especially when step-kids complicate the picture, unless we prepare ahead of time.
