How to Navigate Your Finances as a Blended Family

Congratulations! You have found the love of your life. There is only one complication: this love comes with children and financial obligations. Yikes! How is it possible to figure out which responsibilities to share and which to keep separate?

The good new is that navigating finances as a blended family is not one size fits all. There is a gamut of solutions for families. Here are some solutions that work well. 

Before getting married and becoming ‘official’, consider drawing up a prenuptial agreement. Separating finances from love, this document allows you to sort out your financial love picture whether your marriage ends in divorce after six months or with the death of one spouse after a long and happy union. You can spell out what each party owns as well as what to expect if you end up single again. A prenuptial agreement also allows one spouse to waive rights to any property that might be preserved for pre-blended kids. Make sure to have attorneys draft the agreement prior to the wedding so that each party can review and make sure they agree to the terms.  

Beyond a prenuptial agreement, you will still need to define what your day-to-day financial practices will look like. There are two schools of thought:  divide and conquer or combine and comingle. 

If you subscribe to the divide and conquer school of thought, you agree with the philosophy of maintaining separate accounts while having a joint account for specified household expenses. The advantage here is to maintain autonomy, allowing both parties to feel in complete control. This works when the earning is fairly comparable or drastically different. 

Some households choose to blend and combine all assets. In this scenario, all of the money of both parties is completely combined. This can work well if your family attitude is one-for-all, all-for-one. If ‘equal’ describes how you see the family culture, then combining is ideal.   

One of the hardest questions parents face is how to treat the children evenhandedly – be it your own kids, the step kids or both. From a parenting perspective, it’s important to look at the difference between equal and equitable. Some kids need more. It can't be about money. It's about how you love and support them. 

There are challenges that you will continue to face as your blended family adjusts – financial, relational and otherwise. Most important is to decide that whatever happens, you are going to make it work for the family. Everything is figureoutable after all. 

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Rachel Namoff is a founding member of Arapaho Asset Management, a financial literacy expert, a professional Pilates practitioner and overtly happy and positive.