WEDDING BELLS AND DOLLAR BILLS
By Margorie Engel, Ph.D., © 1999 *
The ability to live in marital harmony seems to be a learned skill because second or third marriages are often reported as happier than first marriages. Marriages appear to work better when couples recognize that they don't have to see eye-to-eye on every issue in order to walk arm-in-arm.
You are becoming a "Bride Again" because your previous marriage ended by the death of your spouse or by divorce. If you or your new spouse have children from a previous relationship, you will be forming a stepfamily. While becoming a stepfamily will create some financial complications, a stepfamily will also enrich and expand your family relationships.
Before saying "I do" to a new mate and new family responsibilities and risks, it is a good idea to know if the two of you see eye to eye on finances. Many people fear that talking about money will spoil the pre-wedding romantic atmosphere. Quite the opposite can be true. Good communication and the exchange of accurate information can help to diffuse anxieties and speed up solutions to any problems that may be uncovered.
If you are feeling intimidated and embarrassed by the thought of talking about how you will handle finances after the wedding, you're not alone. However, money conflicts are a major contributor to re-divorce. Indications are that money should be near the top of the list of things to be concerned about.
By the time we remarry, most of us have a clearly defined money personality. These established ways of managing money are not unique to stepfamilies; they are common in every marriage. You may have additional wrinkles to iron out but you cannot blame every financial problem or argument on your stepfamily status.
Stepfamily Financial Issues
Remarried couples bring an assortment of financial assets and liabilities to the new union. Typical categories include income and taxes; debts and credit; investments and business assets; retirement plans and pension benefits; and future prospects that include earning ability and inheritances. Family responsibilities also impact family finances. These services include homemaking and child rearing; care of extended family members; and, of course, financial responsibility for children of a previous relationship.
Older women, especially, worry about what they may have to give up when they remarry. They may sacrifice alimony; home ownership if they are moving into a new spouse's home; career prospects, especially if a new spouse is nearing retirement age and expects his wife to "retire" with him; and personally acquired pension benefits if she quits work to care for children, a spouse's aging parent, or an ill spouse.
On the other hand, one spouse may bring more financial liabilities to the remarriage. These liabilities may come in the form of preexisting debts; tax problems; very needy children of all ages; college expenses that will dilute stepfamily household money; shaky job security; health problems; and large, extended-family responsibilities. It may be appropriate to discuss ways of evening the score or balancing out the risk for each of you.
The "Marriage Balance Sheet"
These assets, liabilities, and financial inequities force an accounting of the marriage "balance sheet" in a detailed and specific way. Splintered loyalties, new responsibilities, and changing needs all force remarried couples to take into consideration the makeup of this new and complicated family — the myriad combinations of assets and liabilities along with your goals — in order to put the pieces together so they match your intent.
As a general rule, individuals planning to remarry really do want to know how the new family will manage finances. They want to know what's going to happen and what is financially expected of them. Both men and women want to share in the planning; to feel that the goals are realistic; and to conclude that, at any given time, "This financial situation makes sense to me."
For purposes of communication, knowledge of the actual financial facts will help to diffuse anxieties and to find practical solutions to potential problems. This means an inventory of the financial picture for each partner. If your previous financial management style has been "filing by piling," organized information will allow you to negotiate your financial arrangements from a position of knowledge and strength.
Documenting Financial Information
The first task is to gather the correct data. Put all of your basic financial information and forms into a portable Master File box. In the beginning, you and your future husband will each have your own separate file box. A third box may contain joint financial matters. Label individual file folders as follows:
(A complete set of FORM-ulas™, to document information for each of the folders, is on perforated sheets located at the end of THE DIVORCE DECISIONS WORKBOOK (McGraw-Hill). You may also obtain a set from Dr. Engel.) Routine family expenses information can go in an accordion file. This monthly data will be used to develop your family expense management system and for preparing annual federal and state tax forms. Set up this part of the system by labeling the accordion file for paid bills and canceled checks in the following categories:
While you are in an organizing mode, you may want to set up the rest of your financial management system at this time. A step-rack can be used for current financial activities. File folder labels for your step rack will be Action; Current Banking; Current Bills; Pending Bills, for charge card slips; and To Be Copied, for items that belong in two or more places. This may also be the time to update your address book.
In addition to the kinds of financial information that you've already developed in your filing system, there are stories specific to your own family situation. If you don't have a complete picture of the family finances, you can't make good decisions. So, document special circumstances. For instance, Have you agreed to support aging parents? Do you need money for a business investment? Is there an upcoming balloon payment? Is a lack of maintenance (house, auto, appliances, and even on yourself) showing signs of catching up with you? Are any teenagers beginning college soon? Are you reaching retirement age? Does anyone in the family have a potential "time bomb" health problem? Were any benefits given up in order to marry (job, pension, social security)?
This column is about documenting your financial picture. Using this information to make stepfamily financial decisions is a totally separate process. Family finances will be affected by and involved in many areas of your life together. There are important financial topics for discussion prior to a remarriage.
At the very least, couples need to have conversations about key categories in money management. These conversations should be about whether or not to have children together; moving away from your home town; quitting or starting a job; regular and irregular income sources; income tax liability changes; current and pending liabilities (child/spousal support, tax liabilities, pending lawsuits); ongoing and future financial assistance to family members (children and aging parents); money management styles (casual versus bean counting; how you will handle family finances (joint/separate accounts, who pays which bills, etc.); insurance coverage (health, life, property, umbrella); diagnosed health or emotional problems; inheritance money; retirement security; and finally, health care proxies and wills. Many of these financial areas will be separate topics in future articles for this column.
* Dr. Engel is the President of the non-profit Stepfamily Association of America. This article first appeared in Bride Again magazine, Summer 1999. Permission granted for use on the SAA web site by Bride Again magazine.