There are some things in life where you really, really hope the first time is a charm -- marriage, declaring a college major, and bungee-jumping, for example.
Most parents will tolerate a few academic false starts (or force you to pick up the tuition tab for the fifth, sixth, and seventh years). And every bungee instructor will quadruple-check your harness.
Yet despite the staggering rate at which official couplings go splat, many people make multiple attempts at marriage. And they drag more than just half of a CD collection and in-law issues down the aisle. They also bring into their relationships a full trunk of financial baggage that can't be kicked curbside.
Money details for do-overs
There are some key nuts-and-bolts moves that will smooth the transition into a second marriage for people who have merged their money with another's in the past. All this stuff is important, though, whether it's your first or fifth time saying "I do."
- Disclose your finances to each other. (Yes, even that five-figure amount you owe to Mr. Credit Card.)
- Complete a prenuptial or postnuptial agreement to identify the assets each of you is bringing to the marriage. It should also spell out who gets what, should your starry-eyed love flicker out or if one partner -- cue stage whisper -- dies.
- Set up a new family budget and determine how you'll pay your joint expenses.
- Decide how to title your joint assets. After all, you don't want your ex laying claim to your stuff at an inopportune time.
- Develop a new estate plan, including new wills, durable powers of attorney, living wills, health-care proxies, and trusts.
- Adjust your dependency exemption on your tax withholding and review your insurance coverage to make sure you have the proper life and disability coverage for additional dependents.
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Once the practical paperwork is out of the way, it's time to hammer out the financial issues that can trip up true love.
He spends, she spends.
If your first coupling wasn't happily ever after, there are things to do to get it right the second time around.
Dredge up the past: Yes, you need to have "the talk." No, it doesn't have to be squirmy and painful. Start with a few warm-up questions (e.g., "If you had $50 to burn, what would you spend it on?") and then move on to the harder questions (e.g. "Let's talk about how your mother handled the family finances."). Try this money-based version of "The Newlywed Game" to break the ice with your bride or groom.
Deal with your exes: Divorce is complicated and can leave both emotional and financial scars. (Here's some guidance on getting through it.) Some of the sore spots -- such as long-forgotten joint credit cards -- can take a while to surface, as this couple discovered. Don't ignore potential past mistakes that could haunt your new romance. Fess up and face them together.
Discuss how you'll handle the day-to-day: There are bills to pay, accounts to reconcile. And somebody has to give the dog her heartworm pill. There are many unpleasant tasks that need to get done (and not necessarily how you'd like them to be), so you might have to bite the bullet and, yes, compromise. (Stop making that sour face.) Play to each of your strengths -- maybe one of you is a whiz at Quicken and the other is great at shopping for cheap travel deals. Divide and conquer.
Don't feed each other's bad habits: Maybe you're both on the same page about spending and saving. But is it the right page? One couple wrote to me about their shared interest -- shopping. The wife realized that they needed to curtail their free-spending sprees. (Here are some pointers I offered.) Part of being a team means that one person sometimes needs to play "bad cop" for the good of the union.
Bask in your togetherness: Discount shopping can really pay off when there's someone else to help you polish off the tub of peanut butter. There are a lot of other financial benefits, too, such as banking deals, insurance savings, and more. Make sure you and your Sig. O make the most of them.
Plan your future together: The past matters, sure, but the future is what keeps your relationship going. Just because you're starting over doesn't mean you're starting financially anew. Consider the shared knowledge, fully funded IRAs, and savings tricks you each bring to the relationship. Then combine your talents and start making plans to make your money go even further together. Pick goals that keep you both jazzed about what's in store for your relationship. Plan your vacation, early retirement, or home addition. Then map out the money details that will get the job done. When you have goals to keep you excited, that makes dealing with the daily money struggles a lot easier.
Let money be the thing that brings you together and not the wedge that drives you to opposite ends of the house to fume.
For more on managing money for twosomes, singles, families, and empty-nesters, check out the life stages money advice we offer at The Motley Fool GreenLight service. Access to the articles, Money Goals, discussion boards, and GreenLight blogs are free to subscribers. To take a free 30-day test-drive of the service, click here.