Managing finances in a second marriage

Key takeaways

While there may be challenges to managing finances in a second marriage, there are also opportunities.
Communication and openness are important to creating a new combined budget and financial plan.
There are tax and estate planning matters you should consider.

Challenges and opportunities

Preparing financially to get married the first time can be difficult for couples, but combining your finances in a second marriage can be even more of a challenge:

Bringing children into a blended family.
Differing financial goals, spending habits and/or incomes.
Spousal or child support payments.

However, a second marriage also offers the opportunity to do things better and more successfully the second time around.

Talking and transparency

Possibly the most important aspect to managing money in a second marriage is to be completely open and honest with your new spouse about what you’re bringing to the relationship financially.

Your income, assets and debt

Each of you should create a complete list of your real assets and liabilities including invoices, bills, contracts or debts owed, loan agreements and legal claims.

Your credit report

Your credit report tells a story about your credit worthiness and financial responsibility. At some point, you’ll likely have joint credit accounts or co-sign a loan together, so you need to know each other credit scores and how they’ll impact your ability to access credit as a couple.

Your financial goals

Include obligations to parents or family members and spousal or child support.

Your approach to money

Are you a saver or spender at heart? What’s your comfort with investment risk? Do you know the difference between good and bad debt?

Establish shared financial goals

The next steps are to use all the information you’ve gathered about each other to create individual and combined goals for your new relationship.

Create a new budget together including establishing an emergency fund.
Agree on spending limits before the other spouse must be consulted.
Decide who will pay the bills and manage investments including RRSPs, TFSAs and RESPs.
Talk about how you’ll provide fair financial support to each other’s children including post-secondary education.
Discuss how you’ll compromise when your goals differ or how you’ll address any financial conflicts that arise.
Determine how you’ll celebrate milestones.
Discuss how your retirement plans may change now that you’re remarried.
Review your plans regularly to track your progress and adjust when necessary or as important life events occur.

You may wish to get your advisor to help you work through some of these subjects and come to agreement. If you have different advisors, you may also decide to use 1 or both of them going forward.

Understanding tax planning

There are some tax considerations when it comes to second marriages and blended families:

You should consult a tax specialist for more details on how these subjects may affect your situation.

Estate planning considerations

There are several estate planning elements that you should think about updating once you’re remarried:

Wills
Beneficiaries
Insurance coverage including life insurance, critical illness insurance, disability insurance and health and dental insurance
Dependants in your workplace benefits

What’s next?

Now that you understand more about managing finances in a second marriage, why not meet with an advisor to:

Create a new budget.
Change your beneficiaries or dependants.
Update your insurance needs.
Create a new investment or retirement plan.

The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.