the Money in a Blended Family
By Mary and Bill Staton
comes love. Then comes the second marriage, and the blended family,
and the financial surprises. Blended
families face special financial challenges. Should you sign a pre-nuptial
agreement? What if he's saved for his children's college education,
but your kids have no college fund? Maybe your kids are accustomed
to expensive extracurricular activities, and his aren't. How can
you unite a blended family when it comes to money?
financial coaches, money managers, and authors of Worry-Free Family
Finances (McGraw-Hill), we discovered those challenges firsthand
when we married in 1994. But we also found that compromise, negotiation,
and a sense of humor helped us through all the money debates and
difficulties. Try these strategies, all of which we have used, to
bring a little financial harmony to your blended home.
the prenuptial agreement. Don't begin your engagement by trying
to figure out who gets what if it doesn't work out. That's like
looking for the exit before you get through the front door. Most
people don't need a pre-nuptial agreement, and demanding one is
asking for problems. A few years ago we read about a California
attorney who specialized only in pre-nups. After five years in the
business, he gave up his practice and went into general law because
he found that more than 90% of his pre-nup clients had separated
or together? People marrying for the second time have lived independently
for a while, often a long while. Some opt to maintain two bank accounts
and keep their money separate. Others open joint accounts. We think
either way works fine, as long as you're open with your spouse about
how you're are saving and investing. Investment decisions should
always be made together.
and use a monthly budget together. Ugh, you think. But this is the
key to getting what you want with your money. Involve your kids,
Here's how we handled the process. Before we married, Mary always
wrote budgets. Bill never did. But we finally agreed to do one together.
After estimating our income for 2004 and our major expenses, we
drew up a wish list of what we wanted to do with the money. That
helped us talk through our priorities. Now we track how we're faring
with monthly budgets. If Mary is hoping to redecorate the den, or
Bill wants to plan a trip for the family, we have a clear sense
of whether we can afford it.
catch up with college funds. In our case, Mary hadn't been able
to save much towards college for her children. Bill had set aside
a substantial amount for his son and daughter. We knew it wasn't
fair to take from one set of kids and give to the other. Saving
for Mary's children became one of our priorities. We reassured Bill's
children that their money was safe. Though our youngest, Will, is
still at home, Tate, Whitney and Gracie have all been able to pursue
the college education of their choice.
that scholarships, loans, and 529 plans are plentiful. (Excellent
resources include savingsforcollege.com,
and kiplinger.com). Tax advantages,
such as the Lifetime learning credit and the Hope credit, can help
too. IRS publication 970, "Tax Benefits for Education,"
explains more about them. (Download a copy at www.irs.gov/pub/irs-pdf/p970.pdf).
fair, not equal. If your daughter gets horseback riding lessons,
does your son need a new car? Thinking that way will make you poor
in a hurry. Don't try to spend exactly the same dollar amount on
each child. Avoid the temptation to be the good step-parent by buying
things. Listen to each child to determine what she really needs.
The only time we believe "equal is fair" is birthdays
and holidays. We spend an equal amount on each child then.
with your kids about money. If you don't have the money, tell them
you don't, regardless of what their friends have. Money has never
appeared like magic for most families. It comes from hard work and
diligent saving, and all children ought to know that.
your children become investors as soon as you can. We encouraged
each of our children to become investors by giving them money to
start their own stock portfolios. We selected stocks with them and
agreed to match whatever they put in. You can do the same with as
little as $250 per child. By having a portfolio of their own, your
children will start to think like savers, rather than just spenders.
parents, not two. We typically think of the mom and dad as making
all the key financial decisions. But in a blended family, it's more
often Mom, Mom's ex, Dad, and Dad's ex. No wonder money dilemmas
can become so testy and complicated.
agreements may feel very black-and white when you are negotiating
them. Later you realize all the issues you didn't anticipate. Let's
say your ex-husband agreed to pay for your son's college education.
But your son wants to take his junior year abroad, and your ex balks
at paying for it. What to do?
situations come up often in blended families. That's why we urge
you to be friendly and pleasant to the ex-spouses. Negotiation and
compromise will be much more likely when everyone is cordial. There
are no insurmountable obstacles as long as everyone keeps talking.
for life after work. Being a single parent isn't easy financially,
and there's a good chance one of you hasn't been able to save enough
for retirement. Look carefully at your retirement accounts. If needed,
invest more heavily in one of them to ensure you can retire together
-- and enjoy those blended grandkids.
Bill Staton, MBA, CFA, and Mary Staton, MBA, are authors of Worry-Free
Family Finances: Three Steps to Building and Maintaining Your Family's
Financial Well-Being (McGraw-Hill). Their companies include The
Staton Institute, an organization which empowers people to take
charge of their money, and Staton Financial Advisors LLC, a money
management firm. Reach them at firstname.lastname@example.org
There are many scholarships offered by many charities and foundations like the Jenzabar Foundation to honor those gifted kids in industries they are pursuing careers in. That is why it is important research all available opportunities for grants, financial aid and scholarships in your area when it is time for your loved one to go to college.