Money is a tricky topic in any marriage. However, the finances of remarrying are even more complex. Both parties may be coming into the union with their own assets, debts, and spending and saving habits — and often children from previous marriages.
More Americans than ever are entering second marriages, according to a recent analysis from the Pew Research Center. Four in 10 new marriages include at least one partner who has been married before, the Pew Center found.
“Getting remarried gives you another chance to get it right, but you need to make sure you address the issues that may have caused your first relationship to fail,” says Scott Smith, a Wealth Strategist with Wells Fargo Advisors. This advice certainly holds true when it comes to money, as financial incompatibility is one of the most common factors that drive couples apart.
If you’re about to walk down the aisle a second time and thinking about the finances of remarrying, Smith recommends taking the following steps to get your new life off on the right financial footing:
1. Put all of your financial cards on the table
While the process may seem a little awkward, it’s important to share a full accounting of your assets and liabilities. Partners should share with each other documents such as tax returns, pay stubs, and bank and investment account statements. Discuss any financial obligations you have to your ex-spouse, children, or to your extended family. Smith even recommends that you each run a credit report and share it with the other. “I call this the discovery phase,” Smith says. “You each want to know what you are getting into financially before you walk down the aisle. That’s especially important if you’re planning to buy a house together or make other major purchases requiring credit considerations.”
2. Consider a prenup
It may seem unromantic, but Smith suggests that remarrying couples should consider whether a prenuptial agreement would be appropriate. Prenups don’t just spell out how assets should be split if the marriage fails; they also come into play if one of you dies. A prenup is especially advisable if you are bringing a lot of wealth or assets into the marriage or if you have children from a previous marriage you want to protect, Smith says.
3. Discuss your financial goals and philosophies
Are you a spender or a saver? Do you want to be able to support your aging parents as they get older? At what age do you hope to retire? Do you want to have children together? These are among the critical questions that play into the finances of remarrying. Smith says that before you tie the knot a second time, it’s important to examine what money issues caused stress in your first marriage and what steps can you take to avoid them in the future.