Summer has arrived and with it, wedding season! So we thought it would be appropriate to share tips today on how to merge finances well after marriage, specifically with a blended family.
Whether it’s your first time getting married, or a second or subsequent relationship, the last thing you want is for finances to create conflict in your relationship. That being said, bringing together two families or individuals can get complicated, so here are some tips from our friends at Manulife Solutions on key topics to discuss.
Dreaming big: Financial goals
Considering your big financial goals such as going back to school, flipping a house, or travelling the world are crucial to discuss with your partner. It’s also important to discuss retirement and how each of you imagines that time of life. This allows time to plan and save so that your retirement lifestyle can look how you imagine it.
By discussing these goals early, you’re able to choose your highest-priority goals together. This will help mitigate conflict, and can be a fun time of brainstorming together!
Realistic expectations: Budgeting
An important step to achieving those bigger financial goals and dreams is being realistic about where your family currently is financially. A great way to do this is by creating a household budget which reflects the joint income of your family.
At a basic level, you’ll need to divide your expenses into needs and wants. Needs would include things like food, shelter, debt, and child support payments. Wants are expenses you can live without, but that are enjoyable to have, like entertainment, travel, and eating out. You can take into account your savings plan when budgeting and include that investment in your “needs.”
Another important expense to discuss is children. Whether you have them already, or plan on having children, it’s important to discuss things like allowances, post-secondary education, and Registered Education Savings Plans.
Preparing for the future: Estate planning
When you set up a will, you’re advised to update it when any major life events occur, and getting married certainly counts as a major event! It’s important to discuss your wills, powers of attorney, and investments such as Registered Retirement Savings Plans and Tax Free Savings Accounts.
It’s also important to check the beneficiaries on your RRSP or TFSA accounts. There are times when this detail isn’t updated, and a parent or sibling remains the named beneficiary long after the beginning of a marriage or common law relationship. It’s a good rule of thumb to update your beneficiaries after major life changes.
It can be helpful here to speak with tax and legal professionals as well. This will help ensure your plan is tax effective and meets both you and your partner’s goals. Especially if you’re a blended family with children coming from both partners, you’ll want to find a plan that benefits all parties equally.
Finding helpful advice
Financial planners are available to discuss with you all your financial goals, family planning, and investments. With a strong financial plan, you’ll be well on your way to meeting your goals and merging your family well financially. Get in touch with us today at ACN Financial Group to get started!
