family.
Poor planning and disagreement on goals can quickly unravel recently constituted stepfamilies. For one thing, the second or third time around, finances can be an even greater issue since both spouses usually have more assets, more debts, and contradictory money-management styles. Also, asserts Marilyn Bergen, a certified financial planner with CMC Advisers in Portland, Oregon, “the children may have very different spending habits and values. How will you get everyone on the same page?
ACHIEVING FINANCIAL HARMONY
Few things are as unromantic as finances. Before you get too deep into the prospects of marital bliss, you must engage in straight talk about money. There are a myriad of issues to deal with, including child support, prenuptial agreements, property ownership, retirement finances, and estate planning. First, you need to gain a full accounting of your loved one’s assets, debts, legal issues, and tax liabilities. “You want to know what sort of verbal agreements they may have, say to help pay their parent’s prescription drug costs, or to buy a child a car,” says SAA President Margorie Engel.
Take a good look at each other’s spending habits. “Poor spending habits are often what caused the first marriage to break up. You should work to come up with a common financial plan and a debt-elimination plan,” advises Pierre Dunagan, president of The Dunagan Group, a Chicago-based financial services firm. “Commit your plan to paper. Having a document that you both agreed on and signed makes a huge difference. It’s a little hard to dispute.”
Dunagan says once couples are married, they should schedule weekly or monthly meetings to review the family’s finances. The two need to determine whether financial goals are on track or, if not, factors that have stalled progress. Other issues include deciding how money will be managed. You should answer the following questions before you take the plunge: Will you have separate accounts, joint accounts, or a combination of the two? How much will each contribute to household expenses?
Dunagan says there’s another important matter to address: What will the combined financial needs of the children be? Maybe you already made plans for college financing for two children, but how do you now make adjustments for your spouse’s other two? Or, what if you and your new spouse are contemplating having a child together? Have you considered the expenses of daycare, larger living quarters, and the like?
MAKING ADJUSTMENTS
These are matters that the Moyos had to take into account when their family expanded. In fact, the entrepreneurs made some rather smart financial moves along the way. They bought a house with a four-car garage, which was spacious enough to provide living quarters for Yvette’s mother, an office for a staff of four, and the family’s living quarters. “It’s a major resource,” says Yvette. “We’ve used the equity to assist the business, make home repairs, and otherwise keep the family going.”
Another decision they made early on was to get substantial life insurance for each other ($1 million for Yvette, and $1.5 million for Kofi) and for