How to handle finances in a second marriage
Finances and Remarriage
by Gary Foreman
Estate Planning for the Newly Remarried
Second Marriage Finances
Inheritance in a Second Marriage
I'm about to be married for the second time. We each have kids from a previous marriage. Both of our ex's caused money troubles. Neither of us want to go through that again. Are there tools we can use to avoid problems? Do you have advice on whether or not we should have joint checking, etc.? We want to do everything we can to make sure that money doesn't break up our marriage!
As you've already experienced, money problems can be very hard on a marriage. So you and new hubby are right to take some steps now to prevent trouble later. And, there are a number of things that you can do to keep your marriage financially fit.
You can begin with some premarital financial counseling. Too many couples don't spend enough time here. Specifically discuss what things about your ex's financial habits caused problems. This is a great way to learn where your mate is sensitive and for him to understand your hot spots.
Talk about how your parents related to money and what you think about money today. Be open about how you evaluate financial issues. Expect your hubby to be open, too. Insist on honest answers from each other.
You'll need to discuss how to handle day-to-day finances and decide how different expenses will be covered. One frequently used method is the three checkbook system: yours, mine, and ours. It allows for some money that you can use however you wish. It also includes a joint account for your bills.
Decide in advance how much will go into each account. Also, have a discussion as to what you'll do if the joint account runs short of money. A plan now could avoid an argument later.
You might also want to consider having a wish list. That's a list that you both contribute to with things that you'd like to spend money on if extra dollars were available.
I'll assume that you're both working. That, too, is something that you should discuss prior to saying "I Do." You'll need to also discuss whether your paycheck belongs to you or to the family.
You'll also need to consider your wills. Should all children be treated equally? Or will the children from your prior marriage be different from his?
Talk about your retirement accounts. Consider the ones that you bring into the marriage and the ones that you'll create after you're married. The tendency will be to look at your IRA or 401k as being your own money since it's coming from your paycheck, but that can easily cause misunderstandings, especially when you begin withdrawing from the account or consider who the beneficiaries should be.
Some of these discussions will be very revealing in terms of how you relate to money and also how you see your blended family.
Don't be afraid to disagree and even to argue a bit. It's better to uncover any truly irreconcilable financial differences before the wedding.
You'll need to find a balance. Keeping your finances too separate can make it harder to become one with your mate. Most relationships, especially marriages, work better when you share some common goals.
On the other side, putting everything together is much tougher in a second marriage, especially if you bring different resources and responsibilities to the marriage.
A major decision will be which items to consider "household" items and which to consider "personal" ones. How you answer may provide insight into how much of yourself you're willing to invest in the marriage.
You'll also need to decide if differences in income will affect how much each of you contribute to the joint expenses. That will help you discuss career issues and your standard of living.
Plan for a time in the future (6 months? 1 year?) when you'll revisit the issues. You might even want to take a weekend away from home and the kids. It's almost certain that you'll discover some things after you blend your families. Knowing that you'll have a chance to discuss problems will keep them from growing in significance.
Watch what you model for your children. They've already been a part of one failed marriage. How you handle your finances will tell them a lot about the health of your relationship and could affect their own perception of marriage.
Finally, congratulations on your upcoming marriage! May it be stress-free financially!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
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