Changing Families, Changing Finance

Families come in all shapes and sizes. There is no “right” model as long as it is working for you and your children. However, as families change , so do the family finances.

I’ve been single with one, married with two, single with two and married with three. Over these 30 years of family changes I’ve only ever viewed us as one Family, even though we are far from the traditional ‘2.4′ nuclear family.

I’ve experienced the challenges and benefits these changes bring first-hand which is why I work with parents in blended, second or changing families.

All of my clients have children from a previous relationship and are navigating their way in a new family.

Here are some of the common challenges we see.

Money is it’s own Relationship

Money on one hand is very practical. The way we feel, think and act with it, however, is a relationship based on past experiences. Many of our beliefs around money stem from childhood but a sudden family or financial change will impact them.

When a relationship ends especially with children involved, this can leave us with feelings of guilt, shame, anxiety, loss or grief – as well as all the positives.

We may have had a painful separation of finances through the divorce process or absenteeism of the former partner. Financial issues such as maintenance payments, pension sharing orders or loss of a family home. are emotionally charged and the process can be traumatic.

During a previous relationship one partner may have been more controlling or “in charge” of the money. This can potentially leave us feeling unsafe, lacking trust or needing more skills around money.

These feelings and experiences unconsciously effect how we feel and act with money,

As we move into a new relationship with our own unique set of experiences and limiting beliefs we are starting a financial relationship with another person who has been on a completely different journey. And that blend, brings a new level of complexity of its own.

Money Talks

The answer may lie in talking about money. This isn’t always easy, especially when we don’t really understand our own money story or we have associated feelings of fear, shame, mis-trust around finance.

Having someone impartial to work with to bring clarity on your own beliefs can be transformational and provide the tools you need to them work with your partner.

Practical Considerations

There are practical money considerations too.

How families choose to manage money can vary from remaining totally independent to jointly ‘pooling’ all resources. These have largely replaced older styles whereby one partner gives some or most to the other for managing. But more families are choosing what I call an inter-dependant money relationship combining elements of both and trying to financially provide for and protect all children appropriately.

An additional challenge can be when an ex-partner is still influencing the finances, for example with child maintenance payments, the relationship is over but financially still continues until your child becomes an adult.

Financial Relationships

Be mindful before entering a financial relationship with anyone.

In the UK, anything jointly owned, be it a home, savings or debts, both partners are 100% responsible for. Therefore if one defaults on the debt and disappears you will be left owning or owing it all.

Likewise if one partner passes away the joint owner is considered the survivor and therefore owns the savings or home. This may be what you want to happen, but if you each have children its plausible that savings may not go to who you would like them to.

Your credit score may also be affected by anyone you have a financial relationship with.

Inter-dependant

This is becoming a more common money management option for second families as you can maintain your own independence but pool resources on shared family goals including deciding how the family home is owned.

Each partner has their own income and have a joint account for joint expenses, mortgage bills, food etc and perhaps a joint savings account for agreed future spend eg family holidays, new car and emergency savings

Investments such as ISAs and Pensions are individually owned anyway so this fits in with this model although it is possible to have shared investments for future joint goals, and the home can be owned jointly or each with a specified share.

And Lastly, your Last Will….

I’ll cover the topic of Wills and Estate Planning in more detail in the coming weeks. The risk is that without a Will you rely on the rules of intestacy which are even older and more outdated than that 2.4 family.

This means your possessions, savings, home and investments may not go to who you want it to. If you re-marry your new spouse could inherit and then potentially their children rather than yours. If you are not married it wont go to your partner at all.

This is a huge risk for anyone who has children from a previous relationship (I don’t say should often, so that’s important!) so make sure you have a Will.

Book a Wills and Estate Planning call with me to discover more or watch out for next weeks Blog

Want a healthier Money Relationship?

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