Bringing money together in marriage is already a tough subject to navigate, and even trickier when you remarry. Especially later in life when partners may have financial obligations outside the union such as spousal or child support, pre-existing assets or differing financial philosophies. This can create a whole host of new speed bumps to navigate.
These five tips can help set your new relationship on the path to financial serenity:
- Understand past financial experiences: While it may seem obvious, establishing open and honest communication (especially about money) is an important first step. As a couple, take the time to understand each other’s financial positions, including debts, obligations or financial commitments from previous relationships. Being aware of these factors can help both partners develop a better understanding when managing future finances.
- Consider a prenuptial agreement: While it may be an uncomfortable topic, a prenuptial agreement can help protect both partners financial interests. Especially when one partner comes with a significantly stronger financial position or children from a past relationship. Prenups foster the ability to address potential financial concerns and outline how assets and debts will be divided, in case of a separation or divorce. Both partners need to feel financially safeguarded.
- Create a joint financial plan: Whether you decide to merge your finances or keep them separate, developing a financial plan with both short-term and long-term goals can help foster a sense of team. Your financial plan should include savings, investments, debt management strategies as well as how to divide financial chores.
- Merge finances mindfully: As a couple, it’s important to decide together on the best approach for merging finances. Whether it’s keeping separate accounts, opening joint accounts or adopting a combination thereof. Each option has benefits and drawbacks, so choosing an approach that aligns with your values is important.
- Set Clear Boundaries: Discuss boundaries regarding individual spending, decision making and financial responsibility. If there are children from a previous marriage requiring financial support for school or just life in general, both parties need to understand those responsibilities upfront.
Remember, navigating money matters in any relationship requires patience, understanding and a willingness to work as a team. When you remarry, you likely have preexisting financial matters that will affect your new relationship. Discussing your finances openly and co-creating a financial plan can help you build a solid foundation for the future.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.