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How to Successfully Blend Families & Finance

How do you successfully overcome the Practical & Emotional challenges of blended families & finance for family positive outcomes? How can we manage money fairly, without conflict, in step or second-time families? It can be a challenge, but it can be achieved. Let’s first look at some of those challenges and ways to turn them into a positive.

Money & Marriage

Money is cited as one of the top 10 reasons for a marriage ending and in the UK nearly 1 in 2 marriages end in Divorce. The money issues could be financial difficulties, differing financial goals and shared family values or even financial abuse. For many of us, money is simply not easy to talk to each other about – and that is the clue for the first solution.

The Office of National Statistics tells us there are almost 20million blended or step families in the UK, around 15% of all families. A similar number again are lone parents, who may well form a new romantic and financial partnership in the future. Quite simply more families are made up of step, half, co-parenting co-habiting Parents, Brothers, sisters, Mums and Dads; Myself included.

Money is it’s own Relationship

Our beliefs about money are a combination of our thoughts, our emotions and the experiences we’ve had and how we interpreted them. These are often developed as young children, but also through difficult experiences, such as divorce.

These beliefs often go unquestioned and inform our behaviours, our Money Habits. So we have our own relationship with money in the first instance. In our first family we blend two peoples money relationships together. For blended families there are now potentially up to 4 financial influences and experiences. This makes the emotional, practical and legal issues far more complex.

Emotions around Blended Families Finance

  • Shame, guilt over finances
  • Shame, guilt over family structure,
  • Feelings of failure
  • Lack of trust

Starting over can be hard. Learning to let go of the feelings we have around family and money and building trust are 2 steps to blending family finances well the second time round.

Talk about Money

Start with you. Think about what’s valuable to you. What are you money beliefs, thoughts and habits. What can you change, improve or can’t compromise on. You can control, influence and change these.

Talk with each other, openly.

The earlier on in a relationship you both talk about money the easier this is.

What’s valuable to each of you, do you have debt, do you like to pay bills on time, do you prefer to save and invest for yourself or the children.

Be honest, be open and avoid judgement or criticism. Your beliefs may differ but neither are “wrong”. Find your common ground that works for you, your money and your new family.

Set Regular Money Dates

Make this a positive time to sit down, be together, to dream, plan and review and consider putting together a Family Financial Plan. Find expert help if you need it.

The conversations aren’t just about money but your shared family vision. This gives purpose to your money relationship. Do you want to retire early, spend quality time with the children, support children through university or clear the mortgage. What is it you all want for your Family and how can you use your money to achieve that?

Learn to LOVE your Money and Make, Save & Grow MORE

Practical Steps when Blending Family Finances

Your individual finances may be quite different so find a way to work together fairly.

Consider who owns what. Remember anything owned jointly, savings or debts you are jointly responsible for.

Ownership

Consider how you currently own your finances and how you want to own them and whether that supports your wider family.

Anything jointly owned house, mortgage, debts, savings are automatically inherited by the joint owner. This can be positive but also means you are responsible if the other person defaults on a debt for example.

Inter-Dependence

More families are moving away from completely jointly owned or totally individually owned toward an inter-dependent relationship where each own things in their own name, for example pension, savings and share a joint account for food, fuel and bills and family support.

If you own your home together this can be split into two (know as tenants in common) where you each own for example 50%. The benefit of this is you can pass your share to whom ever, for example your children, rather than all going to your current partner.

It is important for credit history and financial security and independence to have savings, investments and even contracts in your own name.

Talk and decide together what works best for each of you as individuals and for your wider family. These decisions should be joint, even if one of you does more of the day to day management than the other.

Equal or Equitable?

Its worth noting the difference here between treating family members equally or equitably.

  • Equal is the same. All children for example, regardless of which parent are treated financially equally. Both partners equally own or share the finances
  • Equitable is not the same, but fair and reasonable in the circumstances. Are all children fairly treated financially.

An example here may be if one parent has a child from a previous marriage who is also receiving income, savings or inheritance from their other parent and you have one together who is wholly dependant. The child you have together may require more financial support from the two of you, whereas the child from the first relationship requires less form you as they also recve from the other parent. It is fair, but not equal.

Another example could be where one partner is earning less than the other but contributing more in time, family support and management. Do you each put in a fair or equal amount? Are both sets of savings being contributed fairly or equally?

What If?

Consider all the what ifs and the scenarios that could affect your blended family finances. These will be different depending on whether you are married or cohabiting. Next of Kin. Who are they legally. Are they inheriting what you want.

  • Savings, Pension & Investments for yourselves. Is there enough in the emergency fund. Are you saving for a particular family goal. Are you both saving and investing equally or fairly.
  • Savings & investments for Children. Are all your children being saved for, is it fair or is it equal.
  • Pension Beneficiaries. Who would benefit from your pension if you passed away.
  • Child Maintenance – if you former partner is paying this, or you are paying to your former partner to support your children, what would happen if you passed away? Is this something you want to protect?
  • Insurances. Imagine the scenarios where your family would be at risk, if someone stopped working or was critically ill or passed away. Insure what you can’t afford not to.

One Last and hugely important note – Wills

I can’t stress this one enough.

Without a Will everything you individually own will follow the rules of intestacy. You could unwittingly dis-inherit a child or partner or let the majority of yours finance go to your new spouse and then to their children , rather than your own. More in this post – Six times your family absolutely needs a Will but if you do nothing after reading this post, please find someone to help you write a Will, your family, blended or otherwise, will thank you for it.

Find out more about writing your
Family Will

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