Successfully Managing Finances in a Second Marriage

Successfully Managing Finances in a Second Marriage

If you’re about to make a second trip down the aisle, you’ve got plenty of company.  

Last year, 40 percent of weddings held in the U.S. included at least one partner who’d been married before. But with the high rate of divorce in second marriages—an astonishing 67%—it’s smart to address potential hurdles before you tie the knot again. 

Second marriages inherently tend to come with more complexities: ex-spouses, stepchildren, and financial complications including spousal support and first family obligations, for example. Money is already an emotionally charged issue that couples fight about, and with the more challenging financial picture that often comes with second marriages, it makes these arguments even more likely and can in extreme cases lead to divorce. Don’t be caught off guard by losing benefits, alimony, or other income source that will terminate with the marriage. Know and understand the implications before they are irreversible.

So how can you reduce the chances of financial conflicts in your second marriage? Here are five smart money moves to consider before you wed again:

  1. Explore your money personalities. Because opposites attract, it’s not unusual for spenders and savers to marry. The key to success is gaining appreciation for each other’s perspectives and strengths. Each of us has a unique relationship to money: we’ve been affected by our life experiences and our belief systems. You don't have to completely agree with each other, but it’s important to understand how your spouse makes his or her financial decisions.
     
  2. Set joint priorities. The older you are, the more engrained your spending and savings habits may be. Still, it’s important to determine how you can work together with your partner as a financial team. Decide if you want to completely combine your finances, keep your finances separate, or combine some aspects and keep some aspects separate.  How you choose to manage the finances doesn’t matter as much as having the conversation and creating a method that’s comfortable for both of you.
     
  3. Make financial transparency a priority. A poll conducted by the National Foundation for Credit Counseling found that 68% of engaged couples avoided money discussions. With so many statistics indicating that financial issues often drive separation, it’s vitally important to have a dialog about your monetary situation before you take your second walk down the aisle. Set up a “money meeting” with your partner and, together, list the items to be discussed in advance so you can both plan for what will be addressed. Be sure to create a judgment-free environment where you can both openly share your assets and liabilities. Bring along your financial documents, including tax returns, bank and investment statements, and your credit report. If you and your spouse-to-be have financial advisers, make those introductions to both parties and include them in your discussions and plans, as appropriate.
     
  4. Update your wills. Life gets a bit more complicated when people marry for the second time.  If one or both of you have children, discussing who gets what in the event of death is essential. Update your wills to ensure your assets will be divided as you wish after your death.
     
  5. Update your beneficiaries. Sit down with your partner, discuss beneficiaries, and make any changes that may be necessary. Include all documents taken out independently, such as life insurance, as well as life insurance received through your place of employment.  Also consider bank accounts, stocks, and retirement accounts.

Exploring these topics and taking the recommended steps can help to get your marriage started off on the right foot, providing a solid financial foundation for the future.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by FAI Wealth Management-“FAI”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from FAI.  Please remember that if you are a FAI client, it remains your responsibility to advise FAI, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. FAI is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the FAI’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: FAI does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to FAI’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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