About 65% of remarriages in the United States involve children from a former relationship or marriage and form blended families, according to Winning Stepfamilies. These marriages lead to the combining of not only families, but homes and bank accounts as well. The U.S. Census Bureau reports that 1,300 new families are forming every day, 66% of remarried couples break up when children are involved, and 80% of remarried, or re-coupled, partners with children both have careers.

For some remarried couples whose unions have resulted in the creating of blended families, the managing of finances can be difficult. After the excitement of a new marriage dissolves, you are faced with the challenging task of money management, and the division of finances for the new blended family should be explored, preferentially before the marriage even occurs. Communicating a plan with your new spouse can help ensure that you are on the same page and headed for a successful life together.

Tip # 1  Set a Budget and Stick to It

Consider your priorities, collectively. Determine what percentage of each individual’s income will go toward the things that are important to the household. This amount should be calculated only after a certain percentage is set aside for savings. Always consider household expenses top priority. Such important priorities will most likely include:

-     Savings

-     Mortgage

-     Household expenses like utilities and groceries

-     Auto insurance and maintenance

-     Medical bills

-     Educational costs (college savings, school tuition)

Make sure you allocate these expenses at a rate that is fair to your mate and yourself by taking each person’s salary into account. Make sure to agree on an allowance for any children, or on how college-age children will handle any money given to them. Also be sure to take into account any child support (for children not living with you), or alimony payments that are ongoing. These issues can be a major source of stress if they are not freely discussed.

Tip # 2  Create Multiple Bank Accounts Between the Two of You

As a couple, you should consider an interest bearing savings account that is a joint account you both have access to for household expenses, vacation, etc. Along with this, you should each maintain your own separate accounts. A certain percentage of each of your incomes should automatically go to each of these accounts.

Tip # 3  Communicate and Make Plans by Determining Each Person’s Financial Habits

It is important to discuss money styles long before the exchanging of vows. The Forbes magazine article “How To Manage Money and Marriage” reports that financial difficulties and different habits in money management are a major cause of divorce. After remarriage, communicating spending desires, habits, and money availability can help prevent the couple from having arguments about money and incurring financial losses. Communicate all past financial failures, problems, current amounts of debt, and even your credit score with your new spouse.

Decide who will control or manage bank accounts, or how you will split this task, and stick to this plan. Be sure to discuss financial needs and plans for the future, such as purchasing a home, educational expenses, children, and saving for retirement.

Tip # 4  Do Not Live Above Your Means

Even though blended family members are choosing to trade in their single-parent income for a dual family income, they must be careful to live within their means. CNN Money explains that “living within your means” basically means not buying things that you cannot afford. It may become tempting to purchase more or incur more debt after moving into a higher income bracket, but blended families should understand that a larger family usually requires bigger expenditures.

Try to cut expenses by:

-     Transferring credit card balances to a new, low balance card, or eliminating them altogether

-     Carpooling for errands and eliminating short and unnecessary car trips

-     Cutting back on going out to eat

-     Shopping around for the best deals on any new purchases

-     Cutting down on utilities (the Energy Star website is extremely useful here)

By including children in the discussion, and making priorities clear, blended families will have a greater chance of a happy and positive family life together.

Additional Resources:

  -     Kiplinger.com’s article “Blended Family Finances”           

         http://www.kiplinger.com/magazine/archives/2008/08/finance-advice-for-second-marriage.html

  -    Blended-Families.com    http://www.blended-families.com

  -    CNNMoney.com’s article “Blended Family, Tangled Finances

        http://money.cnn.com/magazines/moneymag/moneymag_archive/2005/06/01/8260938/index.htm