Posted by Member: Valerie Colin
Disagreements about spending and debt can disrupt any marriage, but they can be particularly divisive when one or both partners have been married before. People entering second marriages often come with additional financial baggage. Issues like child support, alimony, and carryover debts can be common. Nobody wants to be stuck with obligations from their partner’s former relationship, but second marriages often come with these burdens.
1.) Define and Discuss Your Individual Income and Expenses
The most effective way to address these issues is by confronting them head-on with your partner. Start by reducing the details to paper, with both of you writing down all of your assets, obligations, income, and expenses. You can use the resulting picture as the starting point for creating a plan to resolve whatever problems have arisen.
Both parties need to be totally honest about their financial positions, buying patterns, and overall philosophies about saving and spending. For example, if you are bringing children into the second marriage, discuss what you normally spend on the kids. Does your new spouse think you are too generous with the allowance your kids receive, or that you spend too much on their various extracurricular activities?
Life will be easier if you and your spouse have similar financial outlooks, but it’s more likely that there will be some differences. Full disclosure, mutual respect, and frequent discussions will go a long way toward preserving your relationship (and sanity). Be ready to compromise, and honor any commitments you make.
2.) Consider the Pros and Cons of Separate and Joint Bank Accounts
Consider if you will combine your finances, or maintain separate bank accounts. Separate bank accounts can be a good way to lessen potential conflict with differing spending habits. This can work any number of ways, but one example is when you both have separate incomes and each partner’s pay is deposited into their own personal bank account. Common household expenses can be split evenly or by percentage of earnings. Common savings goals can be contributed to from the individual accounts.
3.) Establish an Estate Plan
Estate planning can also be complicated by a second marriage. It will be even more important to spell out who gets what, especially if there are children from a previous marriage. The new spouse, your previous children, and the children you may have in the new marriage will all be better served with a definitive estate plan that addresses each of them.
If it all feels overwhelming, ask your financial professional for help. Seemingly insurmountable problems can often be resolved by input from a third party who is experienced in resolving financial tangles.
Reposted with permission from Gumbiner Savett Inc.