A Checklist to Help You Start This New Chapter on Firm Financial Footing
Who doesn't love second chances? Second marriages often bring with them a renewed optimism for the future. After all, you're getting a second chance at “happily ever after.” The best part is that now you have the benefit of more life experience and wisdom.
On the other hand, you're likely to have a significantly more complex financial life than you did going into your first marriage. This means you and your partner must be thoughtful and savvy about how you will manage your finances.
The following seven steps can help you cover your bases and ensure you remain on firm financial footing as you enter this new phase of life together.
1. Honesty is the best policy.
The healthiest relationships are those based on transparent communication on both sides. To make a solid start together and to avoid any surprises down the road, you should each disclose where you stand financially. This means sharing details on assets, debts, credit history, and any financial support you provide or receive based on a prior divorce decree.
2. Update paperwork.
If you are changing your name or updating accounts you plan to hold jointly, you'll need to dot all of your Is and cross all of your Ts. Notify the Social Security Administration and any financial institutions of name changes, update all your car titles, mortgages, and financial accounts, and update beneficiary information for insurance and retirement accounts.
3. Discuss Family Obligations
Since you will each bring personal financial goals and obligations into the marriage, be sure you understand one another plans. For instance, your spouse may intend to fund their children's college educations while you might feel strongly about helping to support your aging parents. Decisions like this can help determine to what extent you will combine finances or divvy up expenses.
4. Revisit Your Estate Plan
Estate planning is essential for everyone, but it can be particularly crucial for blended families. Suppose you and your spouse are bringing significant assets into the marriage and either or both of you have children from previous relationships. In that case, you'll need to take extra care in ensuring your wishes will be met. This is because probate laws aren't usually written with blended families in mind, meaning you and your spouse may have considerations that aren't adequately addressed. Having an up-to-date estate plan will make sure your assets are provided as you intend.
5. Discuss Merging Finances
While there is no right or wrong answer here, all new couples must have the “yours, mine, and ours” discussion. Some couples merge all of their expenses, cash, and debts, while others keep everything separate. Many choose to keep most things separate but set up a joint checking account for joint household expenses. Regardless of which will work best for you, it's important to discuss things upfront and set expectations and ground rules that work for both spouses.
6. Create a Contingency Plan
At such a hopeful and exciting point in life, no one wants to think about the possibility of the marriage ending. However, as you well know, sometimes things happen that we never see coming. Talk together about the potential benefits of a prenuptial agreement that would spell out which assets remain separate and shared in the event you part ways in the future.
7. Build Dreams Together
Since you and your partner each had a previous spouse, you likely also had retirement savings plans that were designed with particular goals in mind. Now, you get the chance to plan for your new life together, determine your individual and joint goals, and develop a plan to achieve them. A financial advisor can be an excellent resource for you during this process by reviewing where you are and where you want to be and suggesting savvy ways to reach your short- and long-term goals.
Embarking on a second marriage is a hopeful and exciting time. Use this helpful checklist to start your new adventure on firm financial footing, avoid bumps in the road, and live the life you're dreaming of -together. If you're ready to take the next step in securing your financial future, schedule a complimentary 30-minute Discovery Call to learn more.