10 Tips on How to Split Finances in a Blended Family
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Second marriages can bring about a whole new set of financial challenges, and one of the most crucial is figuring out how to split finances in a blended family. If both spouses come from different income brackets, they are probably used to handling money differently, especially regarding their children.
Even if the merging families are from the same background, parents may have different philosophies regarding allowances, chores, and saving strategies. Furthermore, as a single parent, you may have gotten used to making financial decisions without consulting anyone.
Plus, there is a chance that one or both parties may bring financial obligations and debts with them.
What is a blended family?
A blended family is defined as the parents and all their children from this and all previous relationships.
What you choose to call your family is completely your decision. However, a blended family is the one you form when you and your partner bring in children from this and any previous relationships you have had.
Forming a blended family can be challenging, both financially and emotionally. You and your partner may be excited to start a new life together. However, the kids might not feel the same way.
They may feel uncertain about the transition, living with a step-parent or step-siblings. Stepchildren and money may also be another topic of concern for a blended family.
To understand more about blended families, watch this video.
Five common financial issues in blended families
Blended families’ finances can have some common issues. These include –
How to divide assets in a blended family?
A blended family is literally ‘blended’ together. Two people from different financial backgrounds and with different inheritance plans may come together. One person may have more money than the other. One of them is also likely to have more children than the other from their previous relationships.
Therefore, one of the most common financial challenges blended families face is planning the inheritance.
What happens to the money when one or both parents are deceased?
Will it be distributed equally amongst all children?
These are some questions when it comes to blended family finances.
2. Reconsidering financial goals
As a single person, or even a single parent, the way you look at finances is very different from what is expected of you when you are a part of a new blended family.
You may have to reconsider your financial goals and the timeline in which you wish to achieve them. Depending on how much debt you or your partner have, you may have to rethink your investments and the risks you are willing to take.
Related Read: 6 Tips on How to Plan Your New Financial Life Together
3. Joint accounts
Another challenge spouses in a blended family may face is joint bank accounts. Now that you are a family, you may want to spend money from a joint account. However, what part of the income do either of you add to the joint account?
Is it a percentage of your income or a specific amount?
These may be some questions that can arise as common financial issues in blended families.
4. Expense on education
If you have children that are soon going to college, you may also have to account for educational expenses. Going to college or university is expensive, and if you have to pay for it, it might be a good idea to look into that before you decide to have a blended family.
5. Spouse support or child support
Child or spousal support is another huge expense that can be a big financial challenge in blended families.
Related Read: 11 Tips on How to Deal with Blended Family Problems
Ten tips on how to split finances in a blended family
A blended family can face certain financial issues. Here are some tips on how to split finances in a blended family.
1. Have financial discussions before getting married
Couples should talk about finances before getting married.
How to split finances in a blended family?
You can engage the services of a financial planner to map out how obligations and debts incurred with a previous spouse will be handled.
Besides, discuss how new spouses and children will be protected financially.
Thus when you are about to engage in a blended family arrangement communicating a financial plan with your spouse helps to ensure that you are on the same page and are sure to have a successful life together.
2. Plan a budget and strictly follow it
Prioritize your expenses collectively.
Determine the important things and the percentage of each individual’s income that will go towards the household expenses. Make sure you save a fixed amount before incurring any expenses.
Your priorities will most likely be:
- Educational costs
- Auto insurance and maintenance
- Household expenses such as groceries and utilities
- Medical bills
Allocate these expenses fairly by taking each person’s salary into account. Make sure you decide on the allowance for your children or how the college-going children spend the money given to them.
Another important consideration that should be considered is if there is any child support to be paid or whether any alimony payments are ongoing. These issues can cause stress at home if they are not discussed freely.
3. Every couple should have separate bank accounts
As a couple, you should have a joint account so that both of you can access household expenses, vacations, etc. In addition, both of you should maintain separate accounts also.
These accounts should have a certain percentage of your income as savings or child support paid by the previous spouse to separate the amount.
4. Have family meetings
Merging two families means a change for everyone. It also means that financial rules are going to change too. Furthermore, as the kids get older, family and finances will need to be updated.
You can have family meetings where you can explain the situation to the kids and keep things informal so that kids look forward to such meetings.
Related Read: 7 Habits of Highly Effective Families
5. Keep a tight check on the expenses
Although in a blended family, you will be trading your single-parent income status for a dual family income, you cannot live above your means. Make sure that you only buy what you can afford.
It can be very tempting to overspend or take on new debt after moving into a higher-income group. Still, it is vital to remember that blended families usually require larger expenditures.
6. Decide your budget for special events beforehand
How to manage finances in a blended family?
Decide on a budget for holidays or birthdays beforehand, as everyone believes their holiday traditions are the best. Set a limit for presents on birthdays and Christmas to ensure you keep within your budget.
This is an important consideration regarding how to split finances in a blended family.
7. Find out about the financial habits of both the parties
Statistics show that different habits in money management and financial difficulties are major causes of divorce. Therefore, it is important to discuss money styles before marriage.
Communicating spending habits, desires, and money availability before exchanging vows can prevent couples from incurring financial losses and having arguments about money.
Related Read: Manage Finances in Your Marriage with These 9 Healthy Financial Habits
Share past financial problems, failures, current debt, and credit scores.
Discuss who will manage or control bank accounts. It is also important to decide on plans for large expenses such as buying a house, educational expenses, and saving for retirement.
When two families merge into one, there is more to manage and organize than just the wedding and living arrangements. There is a possibility that both partners have their financial obligations and may need to split mutual expenses.
A realistic, well-balanced budget can help reduce money-related stress and make it easier to manage finances.
By communicating the money rules with your spouse and kids, you will have a consistent set of principles effectively outlining how the money should be spent.
One of you may be good at managing day-to-day expenses such as grocery, phone bills, and utility bills, etc. the other may be good at planning investments, stocks, property, etc. if you both know your strengths, focus on them. Delegate duties when managing blended family expenses; you should be good.
9. Plan your separate budgets
Having a family or having a blended family does not mean that you do not have your own life and, therefore, your budget.
Planning your separate budgets is vital for a blended family because you need to know how much you can spend on your expenses and how much you need to save or reserve for family expenses.
10. Spend strictly from the joint account
All blended family expenses should be made from the joint account strictly. This ensures transparency and understanding of how much you have to incur the expenses.
Sharing expenses in a blended family can be easier with a joint account. While this is important, it is even more important to ensure that this is a strict rule and the lines here are always clear, as it can lead to confusion and miscommunication.
Here are some frequently asked questions about finances in blended families.
1. How do you balance blended families?
Balancing or managing blended families can be challenging initially. However, some tips include the following –
- Maintaining clear communication
- Parenting together, not separately
- Create a new family system for your new family
- Be patient and understanding
- Stay connected to all your family members
2. How do you set rules in a blended family?
To set rules in a blended family, understand the rules that your partner and their children had previously. This can help you frame the new rules and ease them into the process of the new family dynamics.
Another tip in setting rules in a blended family includes introducing rules that ensure safety and respect for everyone. Establishing the right boundaries and space can make it easier for children who have never lived together to adjust to the new environment.
Managing the dynamics and finances in a new blended family can be quite challenging, especially for spouses. This is because they have so much in their place to take care of. However, with practice and patience, it can be made easier.
Ensure that you communicate well with your partner throughout the process, and keep the communication clear.
Meanwhile, if you or your children have a hard time adjusting to the new family dynamics, couples therapy or family therapy can help.
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