Finance Tips for Second Marriages
When you both have outside obligations, sorting your finances takes extra planning and open communication.
Money is a major source of tension in any marriage. It can be especially sticky in a remarriage.
It doesn't have to be that way, says Patricia Schiff Estess, author of Money Advice for Your Successful Remarriage. A veteran finance writer and editor from New York, she's been happily remarried more than 20 years. Her advice is to confront the monetary aspects of your new life head-on and early in the relationship. That way, you can build a foundation of informed trust for your new union.
Marriage is a partnership of love and affection, and economics represents just one part of that partnership," Estess says. "If you're willing to make the effort, you can put money issues in their place and get on with creating a happy life together."
Put Your Cards on the Table
Share all your financial information with each other. Keep secrets from each other now, says Scott Neal, a financial planner in Lexington, Ky. and your relationship will pay for it later. "As painful as it can be, full disclosure is the way to go," says Neal, who works with many remarried couples and blended families.
Be specific and thorough. If your divorce decree stipulates that support checks from your former husband will stop when you remarry, tell your new partner. Discuss what you spend on your kids each month - both formal child support and the informal amount you spend on gifts, phone calls, piano lessons or whatever.
Don't skip or gloss over subjects that make you squirm. Realize that even seemingly straightforward subjects can raise highly emotional issues. It's quite common for at least one spouse to bring a great deal of debt to a second marriage; a significant credit card balance to pay off, for example. "A lot of people have difficulty bringing it up," Neal adds.
Once you've talked about facts, it's easier to share feelings about money-related issues and figure out how you're going to handle finances as a family. Remember, says Estess, that "husbands and wives who feel they have equal control over how money is spent have a more tranquil relationship."
Try the "Pot System"
First is the matter of who pays for what and out of which account. Think in terms of the "pot system." Here's how it works:
The one-pot system involves putting all the family's accounts -- checking, savings, investments, everything -- in both names.
The two-pot system divides accounts into "mine" and "yours" -- and rarely comes out evenly. This option works for those who are adamant about handling their own finances and who may be happier not having to justify their decisions about individual expenditures. Couples who opt for this tend to be more affluent or have strong needs for personal autonomy. But watch for problems when there's an inequality in income.
The three-pot system involves a "my" account, a "your" account, and an "our" account. This is the most popular arrangement and the one favored by most experts. It can work one of two ways:
- You pool all resources first for joint expenses, such as housing, food, household and car expenses, then withdraw money for individual accounts.
- You each deposit paychecks into the individual accounts, then pay a percentage into the joint account.
"No one system is perfect," says Jean Lown, a family economist and professor in the Department of Human Environments at Utah State University who studied how 60 blended families handled their finances. "The important thing is agreeing on whatever system you are using."
Budgeting is pretty much the same in a second marriage as in a first, except for child support and alimony (or maintenance). But "there are a lot of issues tied up with these things," Estess says. "The wife may be gritting her teeth every time they send off a check to his ex. Maybe one set of children is getting more than the other. Perhaps her children's father isn't keeping up support payments and the stepfather is expected to make up the difference. Or the husband gets laid off and his second wife winds up taking care of supporting his first family."
This can be tricky terrain. When dealing with such matters, stick with the facts, hear each other out, try to understand what feelings are prompting your partner's behavior, and do your best not to interrupt, ridicule, attack or yell. If you have a problem with your spouse's actions, try asking gently, "Why are you doing this?" If your conversation reaches a sticking point or emotions run high, perhaps a counselor or facilitator can help you walk through the issues.
Share Financial Chores
Making all financial decisions together is the best way to do it, says Margorie Engel, chair of educational resources for the Stepfamily Association of America. Whether you split up the tasks of bill paying and paperwork or take turns is irrelevant, as long as everyone is involved and has a say in things, Engel says.