Blended Family Finances: Creating Unity with Ground Rules

In our last post, we discussed two primary systems for managing your day-to-day cash flow in a blended family. Choosing how you manage your daily finances is important. Every system will have risks and trade-offs; together, you need to decide what works best for your family.

Regardless of how you decide to set up your accounts and handle your cash flow, you need a set of rules to minimize the risks and keep you moving forward together. The ground rules I propose in this article apply regardless of how you manage your daily finances. But, for the sake of this post, I will focus on the three-bucket system.

The “three-bucket” approach, often called the “yours, mine, and ours” method, is a common system for blended family couples to manage their day-to-day finances. The more I call it (or hear it called) the “yours, mine, ours” method, the less I like that name. It seems like the opposite of what we should want – unity. Critics of this system argue that it, in fact, creates disunity and promotes division in the family. On the other hand, critics of the fully merged approach may argue, “Why would they ever combine finances again after getting burned in their first marriage?” The passion on either side can be intense.

But this got me thinking. Does a three-bucket system really create disunity? Perhaps it does if there's a lack of common purpose or vision between the couple. It might, if discussing money is taboo in the relationship. And possibly if unresolved underlying money issues need to be addressed. (If so, I encourage you to meet with a professional counselor to work through those.) Couldn’t these challenges exist even if you fully merge your finances into joint accounts? Does the fully merged system automatically create unity? Not necessarily.

The truth is that the system we use is neither the hero nor the villain, but how we use it is what matters. So, what if there are some simple ground rules we can use to promote a sense of togetherness even when using a three-bucket system?

Keeping Unity in Your Day-to-Day Finances - Four Simple Rules

Follow Your Unified Vision: Regardless of Your Chosen System, Think of Everything as “Ours”

Your unified vision serves as a beacon toward your financial future. It is the cornerstone of your financial planning and decision-making. Together, you can assess a financial decision’s worth by how it helps move you towards or away from the vision you’ve created for your family’s financial future. You can learn more about creating a unified vision here.

Create Transparency and Openness: Keep Each Other Involved in Money Decisions

Use software to aggregate your cash flow (income and expenses). We provide our clients with software to do this, but there are several options you can find online. The goal here is to create a sense of openness even if you have separate accounts or if one partner tends to manage most of the financial transactions.
Review your financial situation regularly. We recommend coming together at least quarterly to review your financial situation. Is your income on track? How are expenses trending? Are any big purchases on the horizon? Should we plan a trip away?

Decide on Spending Boundaries and Limits

Set a limit on spending. At what point do you need to decide together on personal spending? Is it $50, $100, $1,000? Decide together what works best for you. In the age of subscriptions (and ease of making multiple purchases for the same service/product), be sure to account for the total spending.
How and when will you help your family, including children and step-children?
Which expenses are paid through your joint accounts, and which ones individually?

Be Flexible; Your Situation Will Evolve – Do It Together

You cannot plan for every scenario. So, stay flexible and remain committed to communicating as new situations arise. The key here is to remember that your goal is to move forward together, not compete with one another.
You may find that you need to change how you set up your accounts. That is a common experience as you blend your family. Your chosen system, ground rules, etc., do not have to be written in stone. In fact, they shouldn’t be. Just remember that any changes should be decided and agreed upon together.

Fostering Financial Unity and Stability

There are many ways to handle the day-to-day finances in a blended family. Regardless of which cash flow system you use, following these four simple rules will give you a basic framework to help with your daily financial decisions together. This approach not only fosters financial stability but also strengthens your family's unity and trust in financial matters. By working collaboratively, you can build a financial plan that respects and supports your blended family's unique needs and goals.

If you're looking for help navigating the financial complexities of a blended family, let's talk. We're here to guide you through creating a unified financial plan for your blended household. To get started, click here to schedule a call.

Based in St. Paul, MN, Endurance Financial Group is an Independent Registered Investment Advisor partnering with blended families to combine their household finances in a unified financial plan that works for all members of the family. They can be reached by phone at 651-605-2318 or online at efg-planning.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.