Managing family finances

Getting married and starting a family is no easy feat financially, but when it comes to second marriages and stepchildren, juggling monthly cash flow, debt and future asset allocation can be a minefield.

Managing family finances 

Iona Minton
Fri, 25 Nov 2005

This article is a printout from
Copyright © 2000*, a division of Metropolis*

Getting married and starting a family is no easy feat financially, but when it comes to second marriages things can get positively scary. If one or both of the newly married couple have children from their previous marriage, juggling monthly cash flow, debt and future asset allocation among their children can be a minefield.

No two individuals have the same approach to money management, and their offspring can’t help but be influenced by their parents’ financial habits. Bringing children and different financial styles into a second marriage can make for some interesting times, and perhaps even conflict for some couples.

Have a family discussion

One key element to ensure harmony is to sit down and have a family discussion about how things were previously and how they may differ going forward.

Discuss issues like pocket money and lifestyles. Agree on a budget and set down the rules. If a new marriage results in additional kids being added to the family, cash flow will be tighter and the new siblings may have to lower their sights.

Agree on a process whereby the children can approach you for additional expenditure if it’s warranted. So if one child wants an expensive item that falls outside the usual budget, put a fifty-fifty rule in place. Making a child pay for his or her own things teaches them that money is not an unlimited commodity.

There is no doubt that kids will keep a tally on how much you spend on them versus their other siblings, so make sure that you keep a record of how much money is spent on each child to prevent the “she is your favourite” comments that kids use as weapons against you.

Mine, Yours and Ours

Another way to deal with finances in a blended family is to divide income into three categories. Mine, Yours and Ours.

Both parties should manage their own salaries and commitments and then have a communal account for things like vacations, food, rent, electricity, and entertainment. It is even more important for a blended family to be organised and methodical with their finances.

Although the respective couples are divorced they may still have financial commitments to other family members. For example, one of the two may be supporting aging parents, or a down-and-out sibling. The new spouse may not appreciate that his or her money is being spent on someone they don’t even know.

The issue of how the finances should be run should be discussed before you get married. Especially the subject of life insurance, wills and asset distribution in the event of one of the partner’s death.

Communication and open debate

To run a blended household smoothly, communication and open debate is critical.

If possible hold family meetings to map out schedules and financial needs for the coming week. This way you won’t be caught out by junior’s R500 school trip or an annual insurance premium that has to be accommodated. Be consistent, don’t give into nagging from the kids and make sure you stick to agreed budgets. Kids will soon get the message that nag tactics don’t work.

A great way to manage a child’s cash demands is to draw the money that you intend spending on them, like entertainment and pocket money and place it in an envelope. When it runs out that’s it. No more until next week. Rather than you telling them, “I don’t have the money,” the visual of an empty envelope drives the point home.

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