Blended Family Finances: 6 Strategies for Merging and Managing Your Money

Financial issues (and lack of constructive conversations about them) can often break down marriages. And couples who enter second marriages face a whole new set of pitfalls when it comes to balancing blended family finances.

Combining your finances as a blended family can be challenging. After all, each partner brings their own financial habits, obligations, and debts to the new relationship. And when you’re building a new household that includes bonus children (e.g. children from previous relationships), there are a lot of moving parts that need to be addressed.

But by being intentional and communicating openly, your blended family can thrive emotionally and financially.

Here are some strategies to help you merge and manage your money as a blended family.

Have the hard financial conversations upfront

Everyone carries old wounds and habits from previous relationships, which means it’s crucial that blended families have the hard conversations early on. And this includes discussions about each of your current financial situations and what your combined finances will look like.

You might have different strategies for managing your money, including how you save and spend it. Or you might have different philosophies on including your children in household decisions related to money.

There might also be hidden financial concerns that wouldn’t come to the surface until later in the relationship, like a large amount of debt.

So, it’s important you tackle these tough (and sometimes uncomfortable) conversations directly and together as a team.

Frame your conversations around topics like:

• How do you manage your finances?
• What were finances like in your previous relationship?
• What can we do differently to avoid repeating bad habits?
• What’s your existing financial situation?
• How much debt do you carry and from what sources?
• Will we merge all of our accounts and assets?
• Will we keep separate bank accounts?
• Who will be responsible for certain bills and expenses?
• Will your incomes stay the same or will one spouse be transitioning to a stay-at-home role?
• What level of financial support will you provide for your partner’s children?
• What financial obligations are there from previous relationships?

Keep in mind that each partner may have become accustomed to making financial decisions on their own without having to consult someone else. So, take your time with these discussions and figure out what financial solutions are needed for your new blended family.

Related: What I Learned About Setting Financial Goals in My Marriage

Discuss your partner’s financial responsibilities

Blended families have unique challenges when combining finances and lifestyles. For example, one or both partners might have children from a previous relationship, which creates a new family dynamic that must be planned for.

Make sure you understand whether your partner has existing financial responsibilities to his children and former spouse. This includes obligations like child support or alimony.

Each state has different age limits for child support and requirements for spousal support. So, it’s important you have a clear understanding of how much is owed and for how long.

You can start by reading your partner’s divorce decree, which will include information related to spousal support, child support, custody and visitation arrangements, and divided financial obligations.

Consider signing a prenuptial agreement

A prenuptial agreement can protect your financial interests (and your children’s) in the case of divorce in the future. While a prenup isn’t a particularly sexy topic, it can save a lot of headache in the end and force you to discuss tough scenarios now.

By signing a prenup, you can discuss and resolve future concerns related to:

• Premarital assets
• Expectations for spousal support
• Retirement account ownership

Prenups can be a touchy subject for many people, and it might cause a temporary rift in the relationship if your partner feels blindsided. So, approach the topic sensitively and with the best intentions.

Explore estate planning scenarios

What happens if one of you passes away unexpectedly? This is a dreaded question that no one wants to acknowledge.

Many couples avoid the subject of death, but thoughtful estate planning can provide your family with security and clarity — especially for blended families who have children from their existing and previous relationships.

It’s important to openly discuss how your assets will be distributed among your partner and children from all relationships. It can help to focus on the fact that you’re ensuring each family member will be taken care of.

Depending on your relationship, you might run into concerns when it comes to estate planning for bonus children. If this is the case, try looking at the situation from the other side and consider how you would feel if the agreement was reversed.

Once you’ve discussed and agreed upon different scenarios, take action and update or create the appropriate legal documents.

Important legal documents might relate to living wills, trusts, insurance policies, retirement beneficiaries, and more.

By facing this discussion head-on, you can ensure all assets will go to the intended beneficiary. And allow your family to grieve and process instead of focusing on settling your estate.

Create a budget for your new household

Many blended families remarry later in life when they have more established careers and lifestyles. Because of this, they may choose to keep separate finances.

But blended families can run their new household under one budget, even if they don’t have a joint checking account or don’t want to share certain financial responsibilities.

The key is to create a financial plan together. And this requires an open discussion with clear actions.

This might look something like opening a joint checking account that is exclusively for joint household expenses, while maintaining separate bank accounts with limited spousal access.

Or it might include splitting your household budget equally. In this case, each partner takes responsibility for specific bills and expenses.

The point is to make a deliberate effort to get everyone in the household on the same page.
Each partner should understand where money is coming from and where it’s going. That way there’s no financial surprises later.

Don’t forget to include your children

With all the hustle and bustle of combining families, it’s easy to overlook including your children in important household decisions. But, if your child will be splitting their time between multiple households, financial situations can quickly become confusing. Or worse, parents can be pitted against each other.

For example, children might be accustomed to receiving expensive items from one home. And then have to adjust to a more frugal lifestyle at another home. This could cause the child to question their status within each household if the reasoning were never explained to them.

From a child’s perspective, one parent is giving them everything they want. And the other isn’t. So, does one parent love them more? Is one parent financially struggling? Why is the child being treated differently at each home?

Or maybe before blending families you were able to spend lavishly but taking on new family responsibilities has meant cutting back. The last thing you want is for your child to blame your new partner for this shift.

You can’t read your child’s mind. And they can’t read yours. So, it’s best to have a candid conversation that explains your new household’s rules and expectations for all aspects of your home. The more children know the more they can adapt to their new life.

Related: How to Set Financial Goals as a Family

Blended families can thrive

Finances can be a sensitive topic for many people. But it’s better to talk about your financial situation early and often, instead of waiting for it to become a problem later in your marriage.

If you need help navigating the process, you can also consult a family lawyer to discuss your situation and ensure the needs of each family member is being met.