After recovering from your divorce, you find love again. And this time around things are so not straightforward. You are moving in with a new love that like you has children from a previous relationship. Both of you feel uneasy to have the money talk and to discuss how you will care for your children should something unforeseen happen in the future. Truth is you have also struggled with money conversations in the past. Even more-so with your new blended family.
Talking about money and caring for your children with your ex, even today can still lead to some contentious conversations. From everything you understand about your new partners circumstances, things don’t look much better on their end. They have spent the last few years dealing with emotional and financial fallout from their past relationship as well. Now you have decided to move in together… How will you blend your financial and family life without creating additional havoc in all of your relationships? Read on for the Top Financial Tip to Navigate Finances as a Blended Family.
Start the Conversation Sooner Than Later
Learning from the past means having conversations about money sooner than later. Remember breaking unhealthy patterns around money means changing up your routine, being prepared to be vulnerable and modelling the behavior you want to see in your new partner and cultivate in your relationship. Be prepared to initiate the conversation by being open about your financial situation. This can look like talking about the current financial obligations you have, such as debt and child support, as well as spousal support. It could include what your current separation agreement outlines in terms of a care plan for your children and an estate should the unexpected happen.
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Encourage your partner to discuss their financial obligations and how they may change. Also discuss your care plan for their kids including visitation assuming their children don’t live with them and what they would like to see happen with their children should a death or disability strike now that you are building a new life together. The goal from here is to build a shared life and financial plan. One that addresses the concerns and desires you have for your blended families. Recognizing that building out a plan takes time, trust, and patience. It’s important to have these discussions early in the relationship and often.
Consider A Prenup or Cohab Agreement Before Moving In
Chances are you walked away with less than you might have expected after leaving your last relationship. Rebuilding at this stage in your life requires you to hang on to every penny of your settlement. The goal of course is to make your new relationship last but even if it doesn’t – you have assurances that a failed relationship will not lead to your nest egg disappearing.
A Cohab or prenup will also give you the chance to think through worst case scenarios when your head is clear and there is no cloud hanging over your relationship making it harder to trust your decisions at the time. Speak to a legal professional and draft a prenup before moving in. This can make it easier to have the money talk with your new partner since in this case, you would have already have a plan for your finances and children should the unexpected happen.
Build an Estate Plan to Cover Your New Blended Family
At the best of times creating an estate plan can be tricky even with your own children. What is the best way to be fair but not necessarily equal when it comes to who gets what assets? This becomes far more complicated when it comes to blended families. Is your former partner in debt but his ex comes from a wealthy family? Would their children continue to live with you, or the ex should your spouse become disabled or pass away?
How much life insurance should you need now that you are financially dependent on each other to pay the bills? What about the children? What assets will they inherit, and which ones will you keep? These are difficult questions with no easy answers. The key is to discuss the estate plan and build a plan to cover your new blended family that would be considered fair to everyone based on your individual needs.
Cultivate a United Front with Your New Partner
Truth is, kids can have a sixth sense when it comes to taking advantage of seizing on inconsistencies in parenting styles. If you have different values when it comes to how you will manage money situations, this can lead to many conflicts down the road. For example, what if you give your children a much smaller allowance than your new partner gives their children? What if your new partner has difficulty saying no when their children ask them for things? How will the two of you navigate this? It pays to have a plan. Cultivate a united front for the children in your blended family by thinking through how you and your new partner will parent each other’s children and manage finances to maintain a harmonious family life.
Consult A Financial Expert
If you are challenged by having open and honest conversations with your partner and don’t think you will be able to do it alone, enlist the services of a financial planner. A financial planner can help you to facilitate uncomfortable money conversations with your partner and draft a plan that takes into account the needs of everyone involved. The financial plan typically includes creating a joint budget and cashflow statement, net worth statements retirement and estate plan. A certified financial planner can also identify risks and opportunities you and your partner may not have thought of. Remember communication will be the key to navigating life and finances in a blended family. Seek out the resources you need to get your blended family’s finances on the right track!