Blended Family Finances

Blended Family Finances – How we do it.

A quick google search will show you that problems with money are always in the top ten reasons for divorce. It’s probably no surprise to find out that Blended families have it harder too with baggage leftover from previous lives and habits that are already well established. The simple truth is that your blended family finances will either make or break your new life.

Understanding the impact and role money plays in your relationships is a start. A strong and resilient family, blended or not, has at its core, a joint and shared vision for the management of its money and assets. Issues with money are often manifestations of deeper more troubling issues and warrant further reflection.

History is usually against you

You know how you and your partner got here right? At least one divorce or separation led to this point. That means its fairly likely that money has been an issue in the past. Separations with children also involve money. A lump sum might have been involved and there will almost certainly be regular support or maintenance payments. Large assets might also be tied up, a previous life family home might still be occupied by the ex and the children meaning that the asset is not readily accessible.

Any assets might be tied up, locked away for years.

It’s also extremely likely that you are both coming from differing financial positions. Blended families are usually formed later in life, I was 34, which means there is a higher chance for debt to be involved from the get-go. Debt that your new partner had no choice in creating. It’s not the case in my situation but your debt might still be servicing your ex-partner, like paying for house improvements for a house you no longer live in. How does your new partner feel about that?

If the children are older there might already be things in place that you don’t necessarily agree with. Mobile phone contracts, pocket money (for chores or just freely given??), how much to spend on birthdays and Christmas. You might have to navigate already established expectations.

Dealing with child maintenance/support.

Let’s take a minute to talk about a father financially supporting his biological children, in whatever form that takes. I say father but it can be a mother if she isn’t the primary carer. For the purposes of this section, the gender terminology in use is interchangeable. In the UK its called Child Maintenance and in the US its often called Child Support. It can be mandated by the courts or by some other central organisation like the Child Maintenance Service here in the UK.

If this is a problem to you, if you feel resentful or begrudge the money that your partner is, often legally, obliged to pay to support his children, then I urge you to adjust your perception. To be frank its either you adjust your perception or you need to seriously consider the future of your relationship.

You are going to be limiting the potential of your relationship if you hold this resentment because those payments aren’t going away anytime soon.

It is my responsibility to help with the costs of my children’s upbringing. We all know raising a child is expensive. Clothing, food, school uniform, the constant stream of trips. If you resent that money I am sending to help with these costs then you are really saying that you don’t think my children deserve those things.

I asked Nicky about her feelings, she had this to say:

It’s easy to let your feelings about your partner’s ex take over. A high-conflict relationship with an ex where that conflict affects your new relationship is going to cloud your opinion of child maintenance.

It can be difficult to separate your frustrations with the ex, particularly when they are using money as a weapon, and not because it’s in the child’s best interests.

It’s important to remember the money isn’t for any adult. It’s for the children, for them to be safe, secure and have the things they need. High-conflict ex or not, part of accepting your new position in a blended family is to accept your partner’s responsibilities for his children.

Surely it’s better to love, and be with a person who actively wants to provide for and support his family?

Above and beyond

If you or your partner are voluntarily paying above and beyond what you are legally required or mandated to pay then I think the conversation might be a different one. This is of particular concern if any overpayments are having a negative effect on your new life. Is the lifestyle of your ex above and beyond what you can afford for yourself? It might have been OK when you were single but with a new relationship and family, it’s probably time to reassess.

I don’t mean helping to pay for things like school residential trips (which can go up into the thousands) or larger life expenses, but regular overpayments. If you are doing that, and I’m looking at you here Dads, why are you doing this? Really look into why you are doing this. Is it some form of guilt payment? That’s the guilt you feel for being separated from your children? It’s a recent phenomenon but not an uncommon one.

Step up and be a better dad by being a better dad. It’s not something you can buy your way into.

the best gift is you

This is a difficult topic that doesn’t have one solution for all. You might be paying extra money because of other obligations. What would happen if you are forced to pay the mortgage on your old family home because your ex can’t meet the payments? If your name is still on the mortgage then legally, you are still obliged to meet those payments. The alternative is bailiffs, your children being homeless and marks against your own credit rating.

What is and isn’t right to pay above and beyond any legal child maintenance is vastly complex and sensitive and deserves treating with care. What’s important is that you have these discussions with your new partner, work through the reasons why. You might find that you arrive at the same conclusion after the discussion.

Practice full disclosure at all times

It’s not going to serve your relationship to hide things. This might be hard, financial mistakes can be embarrassing and hurtful to re-live but it’s vital if you want to create a shared vision for your future together.

Lay it all out there, what are your current obligations? How much do you pay your ex for your children? What assets do you have? This isn’t the time to hide anything. If you are concerned your relationship might be at risk if you disclose any debts then how is it going to work in 6 months time when that debt is found out?

Be honest with you debt and existing obligations

If your financial situations and outlook don’t match then its probably time to take a real hard look at the relationship. Can you overcome these differences? If you can’t now its unlikely to get any easier in the future. Trust me when I say it’s not wise to ignore fundamental differences in money habits.

Discuss and create your shared financial philosophy

Talk and talk until you can’t talk about it anymore. Talk early in the relationship, before you move in together and as regularly as you need to to keep on track and together.

Chances are you are going to have to compromise somewhere. The discussions (and compromises) you both take now will pave the way for a solid financial foundation. Compromise is a cornerstone of a grown-up, reciprocal and adult relationship. Embrace the challenge and chance to reflect upon your own money beliefs. We all hold some baggage over money – perhaps you are saving for doomsday or spending like it has no value. Maybe you live vicariously through your children making sure they have the best phones and clothes.

Now is the time to question your own motives for how you handle money.

Whatever happens the ultimate goal is to come to a broad agreement about how you as a family are going to handle money. It’s important to talk about everything, from the big life changing stuff down to the little everyday spending. What are your priorities? Have a think about the following:

  • Do you want to go on holiday every year?
  • Are you buying a house together?
  • Are you going to do that house up together?
  • What about kids going through university?
  • What are your retirement plans?
create your blended family financial goals

Talking about the bigger stuff can be really exciting, creating shared goals and a vision of where you want your family to be in the future. However, it’s not so much fun to talk about the day to day stuff:

  • What does pocket money look like for the kids?
  • What is an acceptable amount to spend on birthdays and Christmas?
  • How much do you spend on clothes and food?
  • How much disposable income do you have to spend and how much do you save?

You aren’t going to get through all of this in one sitting but it is important to set out a shared vision for how you are going to manage your blended family finances.

Having a budget really, really helps with this. I have talked about the system we use before, You Need a Budget. This helps us to clearly define our goals, spending or saving and it allows us both to feel like we have a handle on our money.

Should you merge your finances or How to split finances in a blended family?

When it comes to this question, you are really asking something else.

Do I trust this person enough to have access to my money?

or perhaps

Can I stomach seeing my money go to his ex to pay for his kids?

The first question is completely understandable. You might have been stung before (I know I have!) and be reluctant to expose yourself to that possibility again. The second question is potentially more serious and I would ask if a blended family is right for you. I’m not being judgemental. Step or blended families are not right for everyone. Finances can be a litmus test for the blended family.

So, back to the question.

You could come up with a complicated spreadsheet that includes all your families expenses and divide it based on time spent with you. Sounds like life admin hell to me. What happens for summer holidays or times when there is no contact for some reason like an unforeseen illness. I have tried this method. It results in more resentment. “I paid for that meal out last week, it’s your turn now”. It becomes a burden of tracked receipts and spreadsheets about who has spent what.

You don't want your blended family money management to become more about racking receipts than working towards your goals.

It’s probable that the father who has his children less and earns more will be better off with this system. This will create in-equality between all of your children.

You could create a joint account just for bills and you both pay 50/50, saving for bigger items 50/50 also. Once again the bigger earner will be better off. This will create in-equality between all of your children.

I think you know where I am heading with this. I believe for a blended family to be successful they need to merge finances, put all that money that comes into your family into one big metaphorical pot. You could use an actual pot but I wouldn’t recommend it. To be clear this doesn’t mean that you need to share a bank account, Nicky and I handle this method just fine with our own personal bank accounts. Just count all of your combined income as joint. One-pot to be worked with, save toward your goals, spent on fun stuff and to pay for bills and obligations for your family.

Work together.

It prevents any form of “Well I bought this…..” resentment. The biggest win from this method is knowing that you are working together for your family.

How we do it

It’s important to realise that when talking about money and in particular blended family finances, that you are never finished. We are constantly refining, finessing and discussing what we should do with our money. It’s also important to realise that we don’t always agree. But with a respectful discussion, we can work it out and come to point of mutual understanding.

I have never felt as comfortable with money as I do now. That’s not to say I have lots of it, but that I am happy with what the money we do have is doing for us.

Happy blended family finances are possible.

Lee’s blended family money management checklist:

  • We merge our finances. One pot but separate bank accounts. The result is we don’t know who pays for what, we just know that it gets paid.
  • At the beginning of our relationship, we were completely honest about our existing obligations.
  • We have a budget setting meeting at the start of the month and 2 or 3 smaller catch-ups in between. You are using YNAB, right?
  • In the budget setting meeting, we agree what our money is going to do that month. First, we pay all the bills and other obligations. Then we do saving and finally, we spend!
  • Our kids all get the same amount of pocket money. It’s based on jobs to do around the house. Tidy bedrooms, hoover other rooms, clean cars etc. If they don’t do the job they don’t get the money. The jobs are based around life skills. Things they will need to know when they are adults.
  • Our kids all get the same amount of money spent on them at birthdays and Christmas, regardless of what is happening at other parents houses. We can only control what happens in our house, and in our house, everyone is treated the same.
  • We spend the same amount of money on our extended families, my dad gets the same amount spent on him on his birthday as Nickys dad does on his. Fathers days and Mothers days are the same.
  • We have a Family Fun Money pot to make sure we do something fun as a family every month.
  • We both have a no questions asked, guilt-free spending money pot.

I can’t emphasize enough how important it is to talk. You should be talking about it all the time. We quite look forward to our budget meetings, a beer or two and a plan for the month. And be honest, no matter how embarrassing or painful that is for you. The success of your new family might just depend on it.

2 thoughts on “Blended Family Finances – How we do it.”

  1. Very interesting insight you’ve offered here Lee. I hadn’t really considered the long term financial impact of stepparenthood but I can see it has a potential to be a nightmare.

    1. Thanks John. Adding extra layers of emotion onto what can be a tricky and emotive subject to begin with is always going to make it difficult. I have found it can often be a reflection of deeper issues in the relationship and the individual relationships within. When tackled with honesty, empathy and sensitivity it can be a real strength.

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