Hi, everyone, I’m Glory Gray and welcome to the Women’s Wealth Canada Podcast.
Summer is here and it’s wedding season. I enjoy looking at all the wedding pictures my friends are posting. Sometimes it’s their children’s wedding but sometimes they are the bride or groom and they’re entering into a second marriage.
Embarking on a new life together is exciting. But, there’s no doubt that a second marriage can have more financial considerations than a first marriage, particularly if you’re blending families. So, let’s talk today about Five Steps to a Happy Second Marriage.
Step 1: Setting Goals
Let’s begin at the beginning. Setting goals. I think the most important thing about this is making it fun.
I knew a couple who would start every year together by going on a goal-planning vacation.
They’d bring a paper calendar, sit down in front of an inspiring view, like a beach or beautiful city, and they’d write down their goals for the year.
The first thing they’d do is schedule their days off in the calendar for the year. Then they’d take some time to write down their goals for the coming year and they’d make a note of one or two immediate ways they would move forward on those goals.
This is a perfect idea for a couple who is considering marrying or for a newly married couple. And as you write these down, know that this first exercise does not have to be based in reality. This first discussion is the “what do we want” not “how do we get there and is it realistic.” That discussion will come later. Let your ideas flow so that you are true to yourselves and honest with each other.
You may discover some surprises, some goals you didn’t know your partner had. And that’s okay.
Some of the goals you write down will be joint, some will be individual goals, but all of the goals you decide together to accomplish will become Mutual goals. Mutual goals will create strong motivation for being clear and organized financially and will help manage those emotional spending patterns we all have.
Step 2: Agree on Mutual Goals
So, out of those individual goals and joint goals, the next step is to work together to decide on your mutual goals.
If you find your individual goals and dreams are in conflict with each other and the resources you have, you may want to block out another date night to discuss this later and decide on what mutual goals you agree to move forward with.
Once you have your mutual goals written down, keep them in a place you both can access. Revisit these notes every year or so to see if your wants and needs have changed. Some people like to draw a visual picture of their goals, some like lists. Whatever works for you. Then, refer to them occasionally as a guide to your financial (and emotional) wants and needs.
Having that guide written down is an essential reminder for you both to spend mindfully on the things that are important to you. It will help you from going off the rails and getting distracted spending money on things that are not important to you.
Combining households means combining assets…and debts. Talking about money you owe can be a difficult conversation, there’s no doubt. But you must be honest with each other. You both need all the facts so you can come up with solutions and plans together. And, really, once everything is out in the open, you’ll feel so much better. Remember, you’re a team now.
Sometimes, there’s the opposite problem. Maybe neither one of you has any debt but one of you has considerably more assets. You may think, well that’s not a problem, but think about it, if you’re the one with more assets, there may be that ongoing nagging feeling that maybe they married you just for the money. Or a spouse with fewer assets may feel they aren’t an equal partner here.
Have an honest discussion about the assets, clarify what assets need to be earmarked for other people, like children from a previous marriage. And if things are a bit complicated or either of you are uncomfortable, consider talking to a lawyer about a prenuptial agreement. Sometimes just consulting a professional third party can allow you to gain some clarity on anything you may not have thought of.
Step 3: Develop a Mindful Spending Plan
Let’s see, you’ve created mutual goals, you are clear on what you owe and what you own as a couple and how those will be dealt with. Now it’s time to set up a mindful spending plan. You’ll often hear me use the term “mindful spending plan” rather than “budget.” I think “mindful spending plan” reminds you that you have the power to make your spending decisions, based on what’s important to you.
So, it’s very simple: grab your bank and credit card statements. Write down the amount you have coming in every month and the amount you have going out every month. Some things are paid once a year, so just divide the annual amount by 12 months and add it to the pile. If you are self employed or paid by commissions, divide your annual income by 12 also.
In second marriages, your spending plan can include child or spousal support payments tied to the first marriage. Make sure you’re both clear on what they are and how long you need to plan for them.
Now you know what’s coming in and what’s going out. So, how do you deal with paying the bills?
It’s hard enough to deal with this issue as an individual, but as a couple, there are the emotional responses to money for two people to manage.
If one partner is a spender and one is a saver, there will be ongoing conflict unless you work out in advance how to deal with this issue. Remember the goal list of mutual goals you created? Revisiting that together is a great way to deal with this. It can remind the spender to be mindful of only spending on what’s important and it can remind the saver what they agreed to be saving towards, instead of saving for everything.
If you are both spenders, rising debt may leave you anxious and arguing. Again, use the mutual goal list as a guide to keep spending in check.
If you’re both savers that’s great, Just be careful not to be too cheap around your friends. I once heard of someone years ago who was very proud of keeping her utility and transportation bills low. How did she do it? She would bicycle over to friends’ houses every day, which is great. But, she would–I kid you not–bring every electronic device she owned with her, her laptop, her phone, anything that was low on a charge, and plug them into the outlets of her friend’s houses. She’d stay and visit for a while, then unplug everything and head home. Well, if I were stealing all the electricity I needed from my friends, I’d save a lot on utilities too.
So, be savers, yes, but cheap, no. Pick up a tab once in a while.
Anyway, back to our mindful spending plan.
You now know how much you spend each year. So, let’s decide how bills will be paid. Will you be opening a joint chequing account and paying all bills from there? Or, will you have two separate chequing accounts and either pay a portion of everything or maybe one person pays one bill and another pays another. For example, maybe one of you makes the car payments out of their own account, the other pays the mortgage out of their own account.
As long as you both agree to a strategy and are honest with each other about it, whatever you decide is fine.
In our family, we maintain a joint chequing account and the first 10 years of our marriage, I paid all the bills and for the past 15 years, Squatch has paid them. You can come up with lots of ways to handle this.
Step 4: Plan for Retirement
We’ve covered three steps to a happy marriage. Number four is planning for retirement.
Start by asking each other what does retirement look like to you? Where will you retire? What will it cost? Are you both on track to retire at the same time? If not, how will you adjust for that?
Last season on the podcast, I interviewed Retirement Transition coach, Stefa Katamay. We talked about the Real Questions You Should Ask Yourself Before You Retire. You may be surprised at what they are. The podcast was so popular, we created a webinar and you can access it for free just send me an email, and I’ll also leave a link in the show notes here.
Once you have talked with each other about your plans, meet with a wealth advisor who can do the income projections for you to help you figure out if you’re on track with the plans you have.
Step 5: Prepare your Legacy
The final step to a happy second marriage is to prepare your legacy.
Until fairly recently, a second marriage actually revoked your will in some provinces. Now, your existing will can stay in place, so this is an excellent time to take another look and possibly update your will.
Joyce and Mark decided to marry and they both had children from a second marriage. Like many people, their wills leave their estates to each other. Let’s say that Joyce passes away. She bequeathed her estate to Mark, with the idea that Mark will bequeath the remainder of the estate among the children.
Several years later, Mark has a falling out with Joyce’s children. He decides to write them out of the will and Joyce’s children inherit nothing when Mark passes.
Is that possible? Absolutely. There’s a number of ways to avoid this scenario.
One way would be if Joyce set up a spousal trust instead of bequeathing her estate to Mark directly. That would ensure that her estate provided for Mark while he was living, and whatever remained after his death would be distributed according to the instructions she sets out in the trust.
An even simpler solution is for Joyce and Mark to purchase life insurance policies and name their own children as the beneficiaries. That way, their estates go to each other and they have the comfort of knowing their children will also be taken care of with no involvement at all from their spouse.
It also takes the pressure off of Mark, he can live his life without feeling he is responsible for leaving money to Joyce’s children.
Do remember, the older you get, the more expensive life insurance is, so don’t delay looking at this option.
Until next time, this is Glory Gray, your personal trainer for financial fitness telling you to take charge of your finances, plan for the future but most of all, enjoy today. Bye for now.
