Financial Literacy - Families and Finance
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Blended family finances need scrutiny

Working together ...

For marriages to thrive, each individual should have their own goals as well as common ones to work toward with their spouse. Then they can shape their finances to fit those objectives.

"If people can map out what their thoughts are on their goals individually and together -- his, hers and ours -- and map it out and think about what they're trying to achieve, they can work backwards on how they need to work through what their bills should look like, retirement accounts, children's accounts, trust accounts, beneficiary accounts moving forward," says Northrop.

Sherry Campbell of Auxvasse, Mo., came to that conclusion when she got married for a second time. It was a second marriage for her husband as well.

"We do 'yours, mine and ours' accounts. I was still paying for child-related items such as yearbooks, sports fees and school lunches while my husband was involved in an expensive restoration of an old truck. So we used our own money for these types of expenses," she says.

Though they keep some items separate, such as their auto insurance policies and benefits at work, they work together to run the household and help each other out.

"We have an attached household savings account we use to save up for major items like replacing the washing machine. There have been times when one of us was making a lot more, so that one contributed a bit more to cover the bills," Campbell says.

"When my husband needed dentures, he kept his dental coverage and I signed him up for mine as secondary to defray the expense. We each have enough life insurance to give the other spouse enough money to cover the mortgage and other debts while being able to also give some to our individual children," she says.

Planning, staying flexible and keeping the lines of communication open have made their marriage a success so far.

... Or staying apart

But it doesn't always work out that way.

Sometimes couples come together and look at all the numbers before getting married and decide it's just not worth it.

"What happens is that they realize when they commingle their assets, it's going to be very difficult to separate them if not impossible and also too expensive, so they just don't want to do it," says Northrop.

By the time people get into their 50s or 60s, they may have more than just one or two families under their belt. And planning for all the various contingencies can get messy. Not to mention dealing with a looming retirement.

"It gets more complicated as we get older. You're talking about second and third families and older children and separate college funds and trust issues -- a trust for this family and that family and having estate issues. And if one spouse passes before the other ones, who takes care of which children?" says Northrop.

Not exactly a starry-eyed love scene, but couples have to go into their second and third marriages with a realistic assessment of their finances and accumulated baggage.

After all, marriage isn't just a romantic entanglement -- it's a legal and financial one as well.

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