Modern Families: Blending and Balancing Your Combined Finances

Getting married for life isn’t always the way things are done these days. More often than not, people end up marrying multiple times. What happens when a second marriage needs to integrate finances? How do you manage 2 or even 3 dads, 2 moms, and a bunch of kids from different marriages.

Get a Prenuptial Agreement

Most people cringe at the idea of a prenuptial agreement. They think “oh, it’s so unromantic.” That’s because the prenup is often used as a way to protect one spouse from another if a divorce ever occurs. Well, you already know that divorce is possible if you’re on your second marriage.

But, did you know that prenuptials are actually a way for you and your spouse to specify the legal terms of your marriage? Most people have no clue that this is the entire purpose of the contract.

Even personal injury attorneys, like, realize the importance of these types of arrangements. When you don’t specify legal rights in your marriage, the state will specify them for you.

So the decision is whether you will set the terms of your marriage together, or let the state do it for you without your say.

And, the state can change the law at a moment’s notice, without your consent. When you sign a prenuptial agreement, it’s a private contract governed by your state’s contract law and regulations. You can specify financial duties and responsibilities during the marriage, which is a very good idea if you and your spouse make very different incomes.

It sets expectations, and eliminates confusion about who is responsible to pay for what. Because many marriages end due a fight over money, or a related issue, setting this up beforehand is not only not romantic, it might be the most romantic thing you can do for your marriage.

Keep Combined and Separate Expenses

Most people have strong feelings about whether to keep finances separate or combined. In reality, you don’t need to choose. It’s usually a good idea to have both combined and separate expenses. You can designate a mutual account for mutual expenses, and separate individual bank accounts for expenses that you want to pay for yourself.

Each of you having your own bank account also gives you a sense of individuality within the marriage. And, it also reduces the likelihood that one of you will feel as though they have lost their identity after the “I dos”.

Communicate About Money

Communicating about money is important — probably the most important thing you can do in a marriage. When you don’t communicate about money, you are creating a powderkeg and the first argument is like lighting the fuse.

With enough explosions, you will end up single again. Most married couples discover this way too late, at a time when they can’t save their marriage.

Talk openly about how much you want to spend on things like housing and vehicles, how much you want to save for retirement, how much you want to spend on life insurance and entertainment expenses.

If one of you is more financially inclined than the other, that person will have to work harder to involve the other spouse, teach them about finance, and help them better understand money. It’s hard work, but it can be done.

Alexander Woods is a personal finance consultant who branched out a couple of years ago to create his own company. Today he mostly deals with personal finance issues, though also consults on business matters for those who are self employed.

Categories: General

Leave a Reply

Your email address will not be published. Required fields are marked *

May 6, 2016 Modern Families: Blending and Balancing Your Combined Finances