Comingling finances in a blended family can come with its challenges. Deciding who's responsible for paying for children's daycare, extracurricular activities, or medical care can cause frustration if clear communication about expenses is not established at the beginning of the relationship. From establishing transparent communication to finding an impartial third party, here are six answers to the question, "What are your most helpful tips for splitting finances as a blended family?"
Balancing Money in a Blended Family
Establish Transparent Communication
Establish clear communication about financial goals, expectations, and spending habits from the beginning. This can include setting a household budget and discussing financial decisions and expenditures regularly. Additionally, it may be helpful to set up separate bank accounts for each parent to maintain financial independence and avoid conflicts.
Brad Cummins, Founder, Insurance Geek
Take Child Support Payments into Consideration
One or both parents may be responsible for paying child support payments to the child(ren)'s other parent. Child support can put a strain on an already tight budget. Before blending finances, determine what is available in the budget after the other parent has paid child support for children outside the marriage. Setting boundaries on who is responsible for those payments is critical at the beginning stages of marriage.
Annette Harris, Accredited Financial Counselor
Decide Special Event Budgets Beforehand
One of the best practices is to decide the budget for a special event, like a birthday or holiday party, beforehand. Setting spending limits keeps everyone on the same page and sets the expectation for the event without having to make any rushed decisions at the last second. Always try to keep the budgets the same for each child's birthday, especially. Even a little extra can be unfair to the other children.
Annu Daniel, CEO, Elohim Company
Balance Your Budget Periodically
When one parent has child support or alimony payments, eventually, they will come to an end. Determining what to do with the stoppage of payments should be discussed in advance. Consider if the parent will use child support payments to fund their child's college education. If alimony payments are ending, should you save that money as a family, or does the other parent have outstanding expenses or debt that should be addressed first? It may already be a stressful topic, but deciding what to do with the funds before the payments stop can ensure that both parties are on the same page.
Bring in an Impartial Third Party
This can be a challenge, and the last thing you want is for something to cause a rift between family members that can become serious. At all costs, I would do what I could to avoid those issues.
One way to resolve these situations is to involve a third party to examine everything and make a fair decision. A financial advisor from your bank should be able to help, or you can speak to a financial expert online who can provide assistance.
If you talk to the right expert, they should be able to help you manage income, make a schedule for expenses, and evenly divide bills fairly. It will be tough to figure it out on your own, so bringing in a third party is probably your best bet to avoid fights, unfair agreements, or worse.
Shaun Connell, Founder & CEO, Credit Building Tips
Discuss Estate Planning
Estate planning may be the last thing on your mind when you have a blended family. However, a critical discussion should be had when establishing wills and determining what assets children will inherit in the case of your untimely death.
For example, when establishing a life insurance party, who will be the beneficiary of the funds? Will it be your children or all of the children combined in the marriage? If the children are minors, will they be required to live with their biological parents, and should life insurance follow them? These are just a few questions to consider when establishing an estate plan.
What's Next?
If you're in a blended family or preparing to combine your finances, create a checklist of expenses to discuss. Set clear boundaries at the beginning of the relationship to reduce financial discord and eliminate the need to hide your income or withhold your spending habits.
Do you find managing your finances challenging? Book a complimentary consultation to discover the benefits of financial counseling.
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