“Family isn’t whose blood you carry. It’s who you love and who loves you back”.
Blood relations aren’t always the best thing that happen to us. We often find our bliss in step-families, after we’ve gone through the cockeyed experience of our existing families. But this doesn’t mean step-families or blended families are joyous at all times. They do also wrestle with everyday challenges, of which the most challenging task is - money management.
Top money challenges step-families encounter
To recall the Step-family Foundation, “nearly 1,300 new step, blended or second families are created every day in the U.S.; in fact 64% of all American families are some form of blended family.” Due to the country’s 50% divorce rate, blended families are sprouting fast. The blending of families is the outcome of mixing family and money together.
There are certain obstructions that fence smooth money management in step-families. Both parents and children in the step-families are facing financial challenges. Below is the checklist of the challenges and pitfalls faced by step-families.
# Unforeseen financial strain
The main barrier in a second marriage is to overcome the financial pain which came along with the previous relationship, such as, divorce, primary custody of a child and so on. In most circumstances, a step-parent has to face the biggest financial challenge here. He/she has to cope up with new financial situations in their re-married life. So, before entering into another relationship it’s advised to have a talk with your partner about money management.
# Refusal to disclose
Whether it is our first marriage or second, whenever we are deciding to spend our lives with someone else, we are also inviting each other’s past problems. It can be both financial or personal. It is often seen that we hide certain things, especially our financial debts and challenges, from our partners out of fear of losing them.
# Deficit of a proper stratagem
“Love is blind”. This is somewhere true because when in love, we think that it’s the only thing needed for an outstanding marriage. But that’s not true. While accepting each other, we are unknowingly welcoming the complications of our past life. So, if we step forward without a plan, it'll take us deep down financially.
# Responsibility of child support
This is another major challenge faced by step-families. According to the Aviva Family Finance Report, “one in three families with children from past relationships receives financial support from an ex-partner”.
Every step household has its own strategies to support its children. For instance, some parents provide an allowance in exchange for chores, whereas, others don’t give an allowance at all. One set of parents may want their kids to have part-time jobs and donate for their education while the other set might believe that paying for an education is a parental responsibility.
# The inheritance story
From an expert’s point of view, stepchildren have no right to inheritance unless written into a will. This fact is not known by many. There are many poor children who find themselves empty-handed when their parents remarry.
# Insurance plan
Life and health insurance policies in a step relationship is another challenge. Without a proper insurance plan, finances can get tangled. Existing and present insurance policies should be reviewed perfectly in order to avoid problems.
# The tax issue
This is another complicated situation for families going through a divorce. For example, if one spouse moves out of the house during a separation, then this can complicate the spouse's capital gains tax when the house is sold because it's no longer a primary residence. In divorced families, the parent, who gets to claim kids as dependents, also faces a difficult tax situation.
Crown your finances with these handy tips
Money challenges are quite familiar in our lives. But, in a step-family these money challenges are a tough job to overcome. If not handled smartly, then it can make your life a living hell. Are you facing problems in managing your dollars in your step-family? If yes, then have a glance below and find out some handy tips to your rescue.
# Calculate your limits
In a step-family, you should set your limits and have a talk about what you are convenient doing at. According to Deana Arnett (certified financial planner), “There are some people who have a tough time at financially committing to children who aren’t their own.”
Talk about child support. For example, if your partner loses his/her job and can’t afford to make the child support payments, will you pay it? Or what will you do, if your partner’s ex-partner takes your partner to court for non-payments? Will you bail out your partner? A judge can’t make a stepparent pay child support, but they can pressurize the parent to pay. So, sit and calculate your limits with your companion and avoid unnecessary hassles.
Read more: 2 Rare scenarios when stepparents are forced to pay child support
# Road to communication
If you want to take your dating to the next level, that is, if you plan to get married, then communication is a must. Take time out for regular financial discussions. Experts suggest talking about money and household budgets are important for a marriage to sustain. If you’re hesitant to have a money talk with your partner, then take help of some mediator and he/she can be your stepchild also.
# The boundary line
Set boundaries and make it clear what you are willing to invest on your stepchildren. If you aren’t willing to spend your assets on your child’s education, then make it crystal clear. I know it’s not easy to say “no” and these topics are really sensitive to handle. But, in the end, you’ve to take the courage to say “no”, if you don’t want to get into further complications.
# Draw out a financial plan
Creating a financial outline is the most vital of all. In a step-family, designing financial plans get even more complicated with the involvement of your ex and your current spouse. Arnett says, “when you deal with step-family finances, not only are you dealing with your own finances but you’re dealing with the finances to a degree of the ex’s house as well.” So, having a chat with your partner’s ex-spouse may help you understand how to manage money for certain expenditures.
# Label your dollars
Starting a new family all over again with the burden of making some payments related to your ex is tough to manage. So, it’ll be brainy if you label your money and keep it for different use. When you get your dollars, place them separately in envelopes and label them according to their use. This will make you manage your finances smoothly and you’ll get each and every penny of yours in its proper place.
# Keep separate accounts
To manage money with ease in your second relationship, you should keep your accounts separate. Make three divisions - “yours”, “mine” and “ours” account system. Maintain separate accounts - (a) small separate accounts and a large joint account; (b) large separate accounts and a minimal joint account. Keep the separate accounts for individual expenses and the joint account for joint expenses such as rent or mortgage, cleaning, groceries, entertainment, and family or couple vacations, and so on. Also, it's advisable to keep aside something for an emergency, child’s education, and investments.
# Manage cash with caution
When you have money in your hands, it doesn’t mean that you will spend it all. Be careful while making purchases. Needless spending is not acceptable and you can get into great trouble if you don’t handle your dollars with caution. Whenever you feel like spending money on something, always remember that you’ve other important expenses to meet. So, before making any purchase, make sure whether or not it’s fruitful.
Read more: The money mystery: A secret game-plan to multiply your dollars
A last-minute advice
“All happy families are alike; each unhappy family is unhappy in its own way,” - Leo Tolstoy.
At the end, all I have to say is that I really appreciate and respect the decision of those who showed their guts and managed to move on with their lives. Hope that you all are happy in the second innings of your lives. But, don’t run those same mistakes again which made your first innings unsuccessful. Money challenges are quite common. But, remember that every problem has a solution to it. Allot some time from your busy schedule and converse with your partner regarding the money challenges and find an answer to them.
Don’t miss out - Parental divorce: 10 Financial lessons I learnt the hard way
