With divorce rates hovering around 50% and couples remarrying at a high rate, blended families are becoming the norm in the United States. A blended family, also known as a stepfamily, is a family unit composed of two people with children from previous relationships coming together to start a new family.
A study on American family structures shows that 55% of American children live with one of their biological parents and a step-parent. While starting a blended family marks the beginning of a new journey, it comes with unique challenges like communication issues, differing parenting styles, and conflict between children. One of the biggest challenges is managing blended finances.
Whether you have a blended family or are looking to start one, it is best to understand the challenges of merging your families. In this article, we will lay out the most common challenges faced by couples and children in blended families, including issues related to blended family finances and techniques to resolve them successfully.
Challenges Faced by Members of a Blended Family
Statistics surrounding divorce and remarriage in America paint a picture of how tough it is to succeed as a blended family. According to a summarized view of US Census Bureau data, second marriages have a high divorce rate of more than 67%. This figure increases by 15% when there are children involved from a previous marriage.
Let’s dig deeper into the challenges that drive these grim statistics.
Challenges Couples May Face
1) New to parenting
Some adults in a blended family may be new to parenthood and must quickly assume the role of an adoptive parent. Developing relationships with your new family while having no prior experience with parenting can be stressful and overwhelming.
It can take time to identify your parenting style and develop a sense of attachment to someone else’s children.
At the same time, your partner’s children may not have the same respect and love for you that they do for their biological parents. Parents in this category face the challenge of quickly adapting to their role as step-parent and building a new relationship with their partner’s kid(s).
2) Relationships With Ex-partners
Relationships can become complicated when exes are involved. Biological parents have a right to be involved in their children’s lives, but this can cause tension and strained relationships with your new spouse. Besides the emotional strain, balancing work and court-mandated visitation schedules while trying to spend time with your partner can take a toll.
3) Parental insecurities
Step-children may resist the change or have close relationships with their biological parents. Watching your step-children not accept you like they love their biological parents can breed resentment and insecurity, as step-parents may compare themselves to biological parents.
A National Library of Medicine study defines this insecurity as Stepmother Syndrome, where step-parents can feel “preoccupation with position in the family, feelings of anxiety, rejection, ineffectiveness, guilt, hostility, and exhaustion, loss of self-esteem and overcompensation.”
Challenges children May face
Children are the most affected by remarriage. After their parents’ divorce or death, they’ll need to adjust to a new family, follow new traditions and potentially live with step-siblings.
Included below are some challenges that arise out of this situation.
1) Step-sibling rivalry
If both spouses enter the marriage with their biological kids, both sets of children may be concerned about living together and sharing parental attention. There is bound to be competition between kids in a blended family, potentially resulting in bitterness and resentment. A child may crave attention, compete for dominance or assume their biological father/mother loves their step-sibling(s) more.
2) Identity confusion
Being part of a new family can cause an identity crisis in young children. As they live and grow closer to a step-parent, there might be feelings of confusion or betrayal toward their biological parent.
3) Grief and loss after divorce or death
Death and divorce can take a toll on both the couple and their children. Grieving the loss of their loved ones or lost relationships can lead to depression and other mental health conditions.
While a psychologist or counselor can help children express their emotions and deal with the loss healthily, it is crucial to understand what children in a blended family may be going through emotionally to avoid frustration and misbehavior.
Challenges Managing Finances in a Blended Family
Personal finance is a private and sensitive topic for most adults, and it’s no surprise that disputes about money are one of the leading causes of divorce. Successful couples manage family finances as a team, but due to interconnected relationships spanning various households, managing finances in a blended family is especially complicated.
Financial challenges include merging and managing each person’s assets and taking joint ownership of ongoing financial obligations that both partners and their respective families bring into the new relationship.
Below are some common challenges a blended family can expect to face when it comes to finances.
1) Estate planning
Estate planning refers to how an individual’s assets are managed and distributed in the event of incapacitation or death. When blending finances, new partners may need to re-allocate assets equitably to consider partners and children from previous and new relationships. If not appropriately handled, this can lead to hostilities and legal complications.
“One of the major challenges that families don’t often consider is the impact on which assets are left to whom,” says Kevin Lao, a Certified Financial Planner based in Jacksonville, Florida who specializes in retirement planning for blended families.
Lao continues, “Many default to just splitting their estate evenly between a spouse and children. In doing so, this could reduce the tax benefits of certain retirement accounts like 401ks or IRAs that could have otherwise been ‘stretched’ over their spouse’s life expectancy. A common solution I have found extremely effective is using life insurance to satisfy certain estate planning goals for the children, but at the same time preserving their new spouse’s ability to maintain independence to and through retirement.”
2) Financial infidelity
A recent U.S. News & World Report survey shows that approximately 30% of couples have experienced financial infidelity in the past year. Financial infidelity occurs when someone hides or lies about their income, debts, or other money-related decisions from their partner.
Financial infidelity may include hiding loans and credit card debt, lying about income levels, or concealing assets and inheritance acquired before the current relationship.
Financial infidelity fosters mistrust in relationships and can have a devastating impact on a couple’s relationship and children’s future.
We asked Tim and Alexis Woodward, the husband and wife team of Certified Financial Planners at Blend Wealth, how they suggest couples in blended families mitigate the risk of financial infidelity.
“Our number one tip for blended families is to have monthly family budget meetings to review and discuss income, expenses, and account balances on a regular basis,” says Tim Woodward. “We recommend using a personal budgeting software (i.e. Mint, YNAB, Quicken, etc.) to help facilitate these conversations.”
“We also recommend having as many accounts as possible titled jointly to help increase transparency, which then creates a spirit of oneness,” says Alexis Woodward. “Working with a Certified Financial Planner who can serve as an independent third-party in the middle between you and your finances may help reduce any tension that exists around finances in your marriage and may help facilitate honest money conversations.”
3) Money habits
Everyone has money habits. It is crucial for all couples, including those who are building a blended family, to discuss their spending and saving habits, expectations from each other, and financial philosophy.
For example, if one person prefers day trading while the other likes long-term conservative investments, it is essential to go into the relationship with eyes wide open. If only one has biological children, their spending habits are likely to be vastly different than someone who does not.
Aligning financial habits can help a couple to ensure that they’re on the same page and are working towards their life goals with the same level of commitment. Not discussing these issues or differences can lead to conflicts, especially in a blended family.
4) Financial plan
While couples must discuss their money habits, they also have to agree on their long and short-term financial goals.
Will they have more children? What’s the retirement plan? Will they relocate or move to a bigger house? Setting financial goals and having shared visions make a successful blended family.
Ideally, couples should create a joint financial plan, including savings goals, family budget, income sources, debt payments, net worth target, investments, and retirement plans.
5) Financial Obligations Due To Divorce Settlement
Couples must know if their partner owes alimony, child support, or other payments mandated in the divorce settlement. Knowing how much and how long the payments will last is crucial so the family can plan accordingly.
It is also essential to know the laws surrounding alimony and child support. For example, the court can stop alimony payments once the ex-spouse remarries. Child support age limits vary from state to state, but child support stops once the child starts attending college.
Techniques to Manage Blended Family Finances
1) Have an open and transparent conversation
Couples must have an open and honest conversation about their finances, including debts, financial obligations, child support, assets, etc.
This conversation should cover their spending habits and how they previously managed their finances. If necessary, the couple should work with financial experts like tax professionals or financial advisors for better financial decisions.
2) Consider merging finances
Merging finances is crucial to the success of a healthy, blended family, and it promotes unity and togetherness between partners. Blending accounts help partners save for shared goals like buying a bigger house, going on a dream vacation, or paying for shared expenses.
In addition, owning a joint account clearly shows where each partner stands and evokes team spirit, which is pivotal to a blended family. Above all, blending finances is a more convenient and efficient way of managing the family’s finances.
Here’s an overview of the three main models for merging finances.
The proportional method
This model involves couples combining their finances while contributing toward household bills at a rate proportional to their income. Besides joining finances, couples can keep separate accounts for their personal needs.
The raw contribution method
In this case, couples contribute the same amount irrespective of their income. For example, If one partner earns $3,500, the other earns $5,600 per month, and their shared bills total $4,600, they would contribute $2300 each.
Complete combine method
Here, the partners combine all their finances and share the responsibility of paying bills and developing joint saving goals. For many couples, a joint bank account symbolizes their financial union.
3) Consider a Prenuptial Agreement
Consulting a lawyer, especially for couples embarking on a new journey as a blended family, is crucial. A lawyer’s guidance on the prenuptial agreement can help the couple navigate challenging conversations about money and protect their assets.
Couples shouldn’t proceed with prenups without proper counseling from a lawyer. A lawyer will explain the processes and ensure the prenuptial agreement meets the court’s requirements. The requirements include both parties disclosing their assets, income, and financial obligations.
Other requirements include partners reviewing the document and seeking legal advice before signing it. Sometimes the terms of the prenuptial agreement may be confusing, and a lawyer can help the couple comprehend their rights and options.
Overall, every blended family is unique. What works for one family may not work for another. Managing complex relationships associated with blended families is hard enough, but managing blended finances does not have to be. Follow the pointers above to avoid money-related friction and tension between family members. Ultimately, having honest conversations about finances and creating a financial plan will help alleviate the stress.
The sooner partners discuss the issues that may arise as a blended family, the better. This will foster a healthy, financially sound, and happy marriage.