Successfully Managing Finances in a Second Marriage
If you're about to made a second trip down the aisle, you've got plenty of company.
Last year, 40% of weddings held in the U.S. included at least one partner who’d been married before. But with the high rate of divorce in second marriages an astonishing 67%, it’s smart to address potential hurdles before tying the knot again. Second marriages inherently tend to come with more complexities: ex-spouses, stepchildren, and financial complications including spousal support and first family obligations, for example. Money is already an emotionally charged issue that couples fight about, and with the more challenging financial picture that often comes with second marriages, it makes these arguments even more likely and can in extreme cases lead to divorce. Don’t be caught off guard by losing benefits, alimony, or another income source that will be terminated with the marriage. Know and understand the implications before they are irreversible.
So how can you reduce the chances of financial conflicts in your second marriage? Here are five smart money moves to consider before you wed again:
Explore your money personalities.
Because opposites attract, it’s not unusual for spenders and savers to marry. The key to success is gaining appreciation for each other’s perspectives and strengths. Each of us has a unique relationship to money; we’ve been affected by our life experiences and our belief systems. Partners don't have to completely agree with each other, but it’s important to understand how your spouse makes his or her financial decisions.
Set Joint Priorities.
The older you are, the more engrained your spending and savings habits may be. Still, it’s important to determine how you can work together with your partner as a financial team. Decide if you want to completely combine your finances, keep your finances separate, or combine some aspects and keep some aspects separate. How you choose to manage the finances doesn’t matter as much as having the conversation and creating a method that’s comfortable for both of you.
Make financial transparency a priority.A poll conducted by the National Foundation for Credit Counseling found that 68% of engaged couples avoid money discussions. With so many statistics indicating that financial issues often drive separation, it’s vitally important to have a dialogue about your monetary situation before you take your second walk down the aisle. Set up a money meeting with your partner and, together, list the items to be discussed in advance so you can both plan for what will be addressed. Be sure to create a judgment-free environment where you can both openly share your assets and liabilities. Bring along your financial documents, including tax returns, bank and investment statements, and your credit report. If you and your spouse-to-be have financial advisers, make those introductions to both parties and include them in your discussions and plans, as appropriate.
Update your wills.Life gets a bit more complicated when people marry for the second time. If one or both of you have children, discussing who gets what in the event of death is essential. Update your wills to ensure your assets will be divided as you wish after your death.
Update Your beneficiaries.
Sit down with your partner, discuss beneficiaries, and make any changes that may be necessary. Include all documents taken out independently, such as life insurance, as well as life insurance received through your place of employment. Also consider bank accounts, stocks, and retirement accounts
Exploring these topics and taking the recommended steps can help to get your marriage started off on the right foot, providing a solid financial foundation for the future. To learn more or to get started on your personal financial plan, please contact us today.