Hi Ruth,
My partner and I recently combined our lives as a blended family, and managing finances has been tricky. We want to join some of our finances for shared expenses while keeping some independence. The biggest challenge is ensuring fairness when it comes to supporting all our kids equally without causing tension or resentment. How can we set up a system that balances joint and separate expenses while making sure everyone feels supported?
From the beginning, it is essential to realise that you both come into this relationship with potentially very different finances, which you have spent decades creating. The goal is to reach common ground, not choose one approach or the other. You’ve got to respect where you came from, learn why, and navigate a path forward together.
Step one for me would be to meet with a relationship counsellor to discuss your expectations of each other as you move forward in this relationship. From your previous relationships, you’ve each picked up a few habits and ideas, and discussing these might raise issues that can be addressed early in the relationship instead of cropping up later. Money is just one part of a relationship that needs to be aligned, and spending time assessing your expectations in all other parts is worth the effort.
Focusing specifically on money, step two would involve an all-cards-on-the-table breakdown of each of your financial situations, where each of you needs to take the time to track your personal net worth and commit to paper what you own and what you owe. If you want a lasting relationship, you simply must feel free to discuss money openly. No secrets. No blaming and shaming either. This simple exercise shows what you own, what you owe, and where you plan on heading financially. You will see where you align and differ. Make this a monthly check-in.
Next comes budgeting. Some blended families go all in from the start, fully combining their finances. Others keep them entirely separate. The rest steadily move towards blended finances. You do you. There is no ‘best way’.
Each of you starts by tracking your monthly and shared income and expenses separately. If you have shared bank accounts and some individuals, track them all. PocketSmith will easily help you manage this. This way, you will learn about each other’s financial situation and obligations, and over time, you will also find ways to combine or eliminate the ‘easy’ expenses.
While paying for groceries is easy to navigate, paying for the individual needs of each other’s children is not. This can be a huge sticking point for many families when one child has significant expenses and the other does not. I suspect this is where you are concerned about fairness. You will struggle to treat all children equally financially; parenting is not that black and white. Even if you had five children together, each would have very different interests and price tags. Working out how to make it even would be a mathematical struggle. Instead, you would negotiate each request/expense as it came up.
To negotiate this area, how you and your partner exited your previous relationships will raise its head here. If you exited with vague promises to your ex of “I’ll pay for this, and you pay for that”, you need to go back and legally lock in those promises and expectations. Consider these as expenses that you each have to plan and budget for. Reassess them annually.
Two adults in a relationship will always have different expenses. The difference is that these ongoing expenses are tied to emotions, such as an ex-partner and legal obligations set by a court. You need absolutes for the sake of your new relationship, as this is the best way to avoid resentment and tension.
As for how to plan to pay for these expenses, simple budgeting and the use of sinking funds come into their own here. If there is a significant income disparity between you both, it may be that one of you willingly pays towards the other’s child’s expenses.
Given you say you want to join some aspects of your finances while keeping others in your name, I encourage you both to manage your finances the same, but independently. Just like a couple with joint finances would budget their money and have a monthly money meeting, I would love to see you both do the same. Much like different departments within the same company, check in with each other at a monthly meeting to share that you are all working towards the greater good.
You can then see each other’s income and expenses and discuss your financial obligations and goals.
In addition to your monthly check-in, an annual financial check-up is critical. You both take time to plan for the coming year, create shared financial goals, and review the ones you have already made, including your commitments to your children and previous partners.
This includes legacy planning and what you want to do with your individual and shared assets when you die. It is common to want to pass more assets on to your child, not theirs; this is your chance to discuss this.
If you want to protect your individuality, in the eyes of the law, it is not enough to sculpt your own personal finances (that you have reached an agreement with your spouse on) and feel legally protected. You need to make it legally binding so that, if your relationship ends, you get an agreement quickly. As you have sought the advice of a relationship counsellor, I would also speak with a lawyer and discuss creating a contracting-out agreement. As your relationship progresses and matures, you can keep returning to this and amend it.
As your family grows up and your relationship grows older and stronger, your budgeting will change and evolve with it until you ultimately manage your finances in alignment with each other.
I’ve spoken with many who are navigating a second relationship, where each person has children from their previous one. A phrase that stands out to me is to love many, trust a few, but always paddle your own canoe.
Even if you keep some of your money apart, aim to spend a lifetime gaining each other’s trust, respecting each other enough to value previous relationships and the commitments made to your children, and creating a life together. The goal is to live life on your terms while intertwining it with those you love.
Got a burning money question for Ruth? Send them through to [email protected]!
Ruth blogs at thehappysaver.com all about how she and her family handle money. What’s the secret? Spend less than you earn, invest the difference, avoid debt and budget each dollar that flows through your hands. She firmly believes that if you can just get the basics right, life becomes easier from there on in.
