A blend of trust, caution

NEW YORK — When Erika O’Connor and her 6-year-old daughter moved across the country a year ago to be with her soon-to-be second husband, Dennis, she had no idea how he managed his money.

“That was a mistake,” she quipped.

At least she can laugh about it now. By the time they got around to discussing their finances, a month after Erika moved from Scottsdale, Ariz., to suburban Boston, it quickly became a very contentious issue. Having been a single mom for six years, Erika had lived paycheck-to-paycheck and was very conservative. Dennis, however, was a big spender, though “he always managed to come up with the money, somehow.” she added.

Then there was the question of spending on her daughter and his 13-year-old son from a previous marriage. She received child support, he did not. And there were debts from Dennis’s divorce to contend with as well.

“I don’t think I was as transparent as I should’ve been,” Dennis said. “It wasn’t intentional, but it just worked out that way, and it certainly caused some problems.”

Marriage can be more challenging the second time around. The partners are older, perhaps more set in their ways, and may have a dose of skepticism instilled in them from their failed first marriages. Bringing children into the new, blended family can also create difficulties as everyone learns to live together.

But it’s often money that creates the most difficulties.

“What starts as a conversation about finances really becomes a major debate about goals and priorities, and a lot of couples aren’t prepared for that,” said Susan Zimmerman, a financial adviser with Zimmerman Financial Group in Apple Valley, Minn. “It can become disillusioning when it’s the second time around.”

Zimmerman and her husband, Steve, jointly work with couples on planning finances and often find themselves counseling couples as they embark on their second marriages. Susan Zimmerman is a licensed marriage and family therapist, and both are chartered financial consultants.

Since money issues often bring out intense emotions, the Zimmermans said calm, rational communication is the key to a happy financial partnership. And that means more than just discussing who will pay which bills and whether there will be separate or joint checking.

The new couple will have to discuss how they see their future together and what their joint goals should be for themselves and their children. The goals won’t be too different from those they may have set in their first marriages, but the means to those goals will change based on the attitudes and priorities of the new couple.

“How you handle things in this new unit is just going to be very different from how you handled things the first time around,” Susan Zimmerman said. “You have to re-learn how to be a team again.”

The Zimmermans said that, eventually, remarried couples often settle into a his-hers-ours financial plan, in which each partner manages the financial “legacies” brought into the new relationship — including children — and jointly work on household expenses and future planning.

“Administratively, a lot of people settle on her money, his money and their money, and in some cases, the kids’ money, too,” Steve Zimmerman said. “There can not only be segmentation of accounts that already exist, but income as well. It can work, but you do spend considerable amount of time on how to manage the cash flow in a different way.”

Other issues include whose house will be the primary residence and how to dispose of the other home; how to manage contributions to the home and the children when the couple’s incomes vary widely; and how to save for each child’s future. There’s no one-size-fits-all answer to those questions, however. Each new family will have to make decisions suitable for their own unique situations.

In the O’Connors’ example, Erika was renting in Scottsdale, so moving to Dennis’s home in Boston was a simple decision. Each of them manages their respective child’s financial needs, and they are jointly planning for their first child together, due later this year.

That agreement came after some heated exchanges, the couple reported. But they managed to come to agreement not only on their goals, but also on their day-to-day financial lives. Erika pays the bills online and e-mails Dennis afterward. Dennis runs a spreadsheet to keep track of their money. They decide together how best to meet their children’s needs and try to spend equally on each.

Dennis reined in his spending, while Erika allowed that the occasional splurge was OK — “as long as it could fit in the budget,” she said.

“I’ve come a long way,” Dennis said. “I’ve never been the best manager of finances. But cooperating with my wife, I’m now in the best financial position than I’ve ever been in.”