Blending families and assets: How to make it easy

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By Rowena Chan, TD Wealth

Special to the Financial Independence Hub

Finances can become challenging when adding — or removing — a new partner, stepchild or extended family member into a household. The instances of blended or multigenerational families are becoming more and more common in Canada as the number of multigenerational families has grown in the last 15 years – rising 37.5 per cent. In addition, 12.3% of families in Canada are stepfamilies, according to recently-released 2016 Canada Census data.

A recent TD survey found 66% of Canadians living in a blended family say they face financial challenges because of their household situation. Additionally, 47% find juggling these challenges stressful. The top three financial challenges they faced are determining who pays for ongoing household expenses (25%), having different views on managing the household budget (23%) and determining household saving priorities (21%). Take a look at this infographic here for more survey findings, tips and advice.

No matter your family situation, money matters can get tricky. To guide you through the process, there are some simple steps blended families can implement to help create a more stable financial future for everyone involved.1.) Talk first 

While there are obvious discussions to have, like whether or not to join bank accounts, other considerations such as life insurance should also play a role in your full financial plan in order to protect your financial obligations. Consider speaking to a financial planner who will work with you to understand your unique needs and help you achieve your financial goals.

2.) Build a budget together

It’s important to build a budget together to ensure everyone is on the same page about allocating money. Remember that each person comes into the household with different financial values: someone might be a spender, while another feels it’s important to save every penny. Developing a budget together will make surprises less likely.

3. ) Set expectations

One person is usually better at the day-to-day management of ongoing household expenses. It’s okay to designate one person as the lead or bill payer, but others should be involved to know what’s going where. Since it’s rare that each family member earns the same income, it’s best to pre-determine how much each person will contribute to day-to-day expenses.

4.) Create some space

You may decide to have separate budgets for each person to spend on discretionary items of their choosing. Perhaps it’s a line item in the family budget called “fun money.” These are the funds that can be used any way the person chooses, and gives spenders and savers a bit more freedom and less stress about having to report back on all purchases:  just as long as each person remains accountable for staying within their budget.

5.) Touch base often

It may seem obvious, but it’s important to communicate frequently. Whether it’s discussing budgets, financial goals or even household rules, having ongoing conversations will lay the groundwork for a well-functioning home.

Regardless, having an open discussion ahead of time will lay the groundwork for a well-functioning home. Even if you’re currently living in a blended family, it’s never too late to sit down with a financial planner to make sure you’re making the right choices. That way, you can spend less time worrying about finances and more time enjoying your family.

Rowena Chan is Senior Vice President, Financial Planning, TD Wealth, TD Bank Group. Based in Canada, Rowena is responsible for the strategic direction of the Financial Planning business and the Mass Affluent strategy for TD Wealth. Rowena is a member of TD’s Women in Leadership Committee and the Graduate Leadership Program Advisory Council.  

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