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Finances in a second marriage: talk it out first

By Gary Foreman
Published: November 08, 2012

The New Frugal You
New Frugal You columnist Gary Foreman
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. He writes "New Frugal You," a weekly Q&A column about frugal living, for CreditCards.com

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Question for the CreditCards.com expert

Dear New Frugal You,
I'm about to be married for the second time. We each have kids from the previous marriage. Both of our exes caused money troubles, and neither of us want to go through that again. Are there any tools that we can use to avoid problems? Advice on whether we should have joint checking, etc.? We want to do everything we can to make sure that money doesn't break up our marriage! -- Sharilynn

Answer for the CreditCards.com expert

Dear Sharilynn,
As you've already experienced, money problems can be very hard on a marriage. So you and your new hubby are right to take steps now to prevent trouble later. And there are a number of things that you can do to keep your marriage financially fit.

You can begin by taking the time to do premarital financial counseling. You don't want to be one of those couples who spend more time discussing napkin holders than their financial expectations. So that you don't repeat some ugly history, specifically discuss the financial habits of your exes that caused problems. This is a great way to learn where your mate is sensitive -- and for him to understand your hot spots.

Talk about how your parents related to money, and what you think about money today. Be open about how you evaluate financial issues. Expect your hubby to be open, too. Insist on honest answers from each other.

You'll need to discuss how to handle day-to-day finances. Decide how different expenses will be covered.

One frequently used method is the three-checkbook system: yours, mine and ours. It allows for some money each of you can use as you wish, and includes a joint account for your bills. Decide in advance how much will go into each account, and discuss what you'll do if the joint account runs short of money. A plan now could avoid an argument later.

You might also want to consider having a wish list. That's a list that you both contribute to with things that you'd like to spend money on if extra dollars were available.

I'll assume you're both working. That, too, is something that you should discuss prior to the I-do's. Talk over paychecks, when the money comes in, where it should go -- and whether it belongs to you or to the family.

You'll also need to consider your wills. Should all children be treated equally? Or will the children from your prior marriage be different from his?

Talk about your retirement accounts -- both the ones that you bring into the marriage, and the ones that you'll create after you're married. The tendency will be to look at your individual retirement account or 401(k) as being your own money since it's coming from your paycheck. But that can easily cause misunderstandings, especially when you begin withdrawing from the account or consider who the beneficiaries should be.

Some of these discussions will be very revealing. They'll show not just how you relate to money, but also how you see your blended family. Don't be afraid to disagree. You might argue a little -- or a lot. If the latter, so be it. It's better to know if you have truly irreconcilable financial differences before the wedding.

You'll need to find a balance. Keeping your finances too separate can make it harder to become one with your mate. Most relationships, especially marriages, work better when you share some common goals.

On the flip side, lumping everything together is much tougher in a second marriage, particularly if you bring different resources and responsibilities to the marriage.

A major decision will be which items will be considered household items and which personal ones. How you answer may provide insight into how much of yourself you're willing to invest in the marriage.

You'll also need to decide if differences in income will affect how much each of you contribute to the joint expenses. That will help you discuss career issues and your standard of living.

Plan for a time in the future -- maybe again in six months or a year -- when you'll revisit the issues. You might even want to take a weekend away from home and the kids. It's almost certain that you'll discover some things after you blend your families. Knowing that you'll have a chance to discuss problems will keep them from growing in significance.

Watch what you model for your children. They've already been a part of one failed marriage. How you handle your finances this time will tell them a lot about the health of your relationship and could affect their own perception of marriage.

Finally, congrats on your upcoming marriage! May it be stress-free financially!

See related: Finances in a second marriage, Mine, yours and ours: Marriage and your money, 7 ways to ensure a financially successful marriage

For more than 35 years, Gary Foreman has worked to help people get the most for their money. Prior to founding The Dollar Stretcher.com, he was a financial planner and purchasing manager. Gary began The Dollar Stretcher website and newsletters in April 1996. Today the website features more than 6,000 articles on different ways to live better for less. Gary has been interviewed by The Wall Street Journal, The Nightly Business Report, USA Today, Reader's Digest and other newspapers and magazines. Gary answers a question about a budgeting or saving issue from a CreditCards.com reader each week. Send your question to The New Frugal You.