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Financial Planning for Blended Families: 3 Stages of Life

By February 7, 2017April 17th, 2020No Comments

Planning Your Family Finances | Sharkey, Howes & Javer

The idea of a “traditional” family is ever evolving, and the United States Census Bureau has the research available that clearly outlines the profound shift in family formation. The reports show that families made up of two married heterosexual parents raising their biological children under age 18 now comprises only 20% of households, down from 40% in 1970.

As the traditional family reforms into modern day living, the financial challenges felt by blended families continue to increase. Although there are many definitions of blended families, we are focusing on second marriages and parents sharing custody of children from previous marriages for the purposes of this article.

There is no clear cut “right or wrong” way of managing household finances. Each family needs to find the method that works best for them. We have helped many blended families organize their financial lives, and here are a few themes we find in three different general stages of life.

Young Families

The term “threenager” continues to increase in popularity to describe just how difficult it can be to raise a toddler. And what happens when you throw in a “his, hers, and ours” scenario? Not only can the family dynamic and heightened emotions complicate the scene, but what about household finances? Who is responsible to pay for what? (Is it possible that you or a family member ended up with a holiday spending hangover last month?)

In addition to budgeting and tracking the kid’s expenses, protecting the parents’ financial future is crucial. Often overlooked is a young parent’s greatest asset: his/her ability to earn an income for the next 30+ years. Making sure that proper disability insurance is in place can be key to protecting this precious asset. And if a breadwinner passes away, is the correct amount of life insurance in place?

In addition, young parents early in their career can often be subject to economic fluctuations and job displacement, and therefore having the proper amount of emergency savings is critically important. Another key factor is having the conversation with current and/or ex-spouses about college savings for the kids. Who is responsible and what is the target?

The Middle Years

Now that your “threenager” has developed into a full blown teenager, new financial complications can arise. Having regular family meetings can help in two areas: keeping communication in the family open and offering the opportunity to begin to teach young adults about responsible money habits. If you were living paycheck-to-paycheck when the kids were little, do you have more breathing room now? Have you started saving for your own retirement and are you on track to meet your goals?

When it comes to the kid’s expenses, a News for Parents article describes so delicately: “Think fair, not equal. If your stepdaughter gets horseback riding lessons, does your son need a new car? Thinking that way may make you poor in a hurry. Don’t try to spend exactly the same dollar amount on each child.”

Later in Life

Oftentimes when two people merge households later in life, the children are grown and may even have children of their own. Your financial needs have likely shifted and new complications arise. Understanding the impact on your Social Security benefits or pension income is important, as well as updating your estate planning. Before visiting with your estate planning attorney, you will want to have a very honest conversation with your spouse about your personal preferences for heirs of your estate as well as powers of attorney. Will your inheritance go to both your biological children and step children? Or your spouse? Or a blend of the two? How will these decisions affect the dynamics of your blended family after you pass away? Once the documents are in place, the personal memorandum needs to be filled out. You will want to start having the conversations revolving around “Who wants the family china?”.


Navigating personal finances in a blended family can be challenging, but we would be happy to help you create a road map and put it into action. Please call Sharkey, Howes & Javer at 303-639-5100 to schedule a complimentary consultation!

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