2. How will you manage your money?
Once you disclose all your financial accounts, habits, and liabilities, it’s time to decide how you will manage your money.
To do this, think about what worked in your first marriage. While each marriage is different, reflect on your previous financial missteps and learn from them.
In a first marriage, most couples wing it. They don’t necessarily flush out every financial move. However, it’s important to do this the second time around.
You need to decide before you get remarried, how you will manage your money. Will you have a joint bank account or will you have a hybrid system?
In a hybrid system, you have separate bank accounts. In those, you take care of past financial obligations. You also create a joint account for your new financial responsibilities.
Merging your money in a first marriage makes sense. Remember, it’s a whole new ball game the second time around.
3. Create a financial plan
What are your long-term financial plans? Each spouse should answer this question separately. Create a financial plan with the answers.
Reaching your financial goals often takes longer in a second marriage. While you may have more assets, you probably have more debts or liabilities.
If you have children, there are extra financial obligations there too.
Plus, some spouses take a huge financial hit in a divorce. So, it’s common for a person to start over after divorce.
Create a monthly budget, and stick to it. Take into consideration all expenses. This is especially important if you separate your bank accounts.
Talk with a certified financial planner about your goals. There are 10 questions you should always ask a financial planner.
These answers help you choose the best individual for your financial interests.
Consumer Reports considers a fee-only financial planner the most neutral. You pay a flat fee for his services. Therefore, a fee-only planner is not persuaded by commissions from products he sells. A fee-only advisor will always act as a fiduciary by putting you first because you pay a fee.
Ask the advisor if he belongs to a professional organization like the XYPlanningNetwork (XYPN). This means the advisor takes his responsibility to you one step further. To get into this network, the advisor signs a fiduciary oath.
4. Create a prenup
Of course, nobody wants to talk about “what if” but it’s the reality of life that divorcees know all too well. Decide ahead of time how assets will be divided.
Most couples enter a second marriage with established careers, bank accounts, and families. So, it’s not as easy to split all finances down the middle if the marriage, unfortunately, doesn’t work out.
To do this, figure out your net worth as individuals and as a couple.
Work with a lawyer to establish a prenup.
5. Estate planning
Again, more “what ifs”. When you remarry, you don’t want to think about losing a spouse. However, it’s a reality of life. If you have a blended family, estate planning is important to protect your children.
Blended families can bring you a lot of bliss but also a lot of headaches. Imagine the complications if a spouse dies.
Create a detailed estate plan. That way, children are not thrown into the middle of a mess if you should pass.
Make sure your beneficiary designations are up to date. Do you want your ex-spouse, new spouse, or child to be the beneficiary? Be honest with your spouse about your decision.
Some financial experts believe it’s best to list your child as a beneficiary. That way, there is no disagreement if you pass.
If you put your new spouse, there may be friction you can’t predict. You expect they will make the best decision for everyone, but that doesn’t always happen. If you want to protect your children, it might be better to put them as beneficiary.
Take your estate planning one step further with a will and power of attorney.
If children are part of a second marriage, estate planning is important. For your child’s sake, consider estate planning before a second marriage.
What money talk did you have that helped your second marriage?