It’s impossible to stereotype the modern American family. These days “normal” family life is simply undefinable. Multiple marriages, divorces, step-parents, bonus parents, single parents, and life partners make up happy households across the country.

These modern family dynamics create unique challenges when calculating household income and expenses. No two families are the same, and therefore, no two family budgets are the same either. Whatever your family looks like, Flanagan State Bank cares about helping every family find a budget that works.

Understanding Unique Financial Budgeting Challenges

How you choose to handle finances in your house is between you and your partner. Even traditional Illinois households have trouble deciding whether or not to combine bank accounts in their marriages. For non-traditional families, unique challenges can include merging finances from previous relationships, child support, alimony, and even different spending, saving, and budgeting habits that might have been in place for many years.

If you are starting to navigate a family budget with a new spouse or partner, it’s important to approach financial conversations directly. Make sure that everyone involved has a clear picture of financial obligations to past relationships and any legal stipulations around divorce and remarriage. Don’t shy away from discussions about money. Have these conversations early and often to avoid financial conflict in your relationship.

Setting Up a Unified Family Budget

When couples move from the dating phase into a serious relationship, many aspects of life shift from being “mine” to “ours.” Suddenly it’s less clear who should be paying for what, and tension can arise if one partner feels inequity in the budget. If you haven’t talked about how you plan to handle budgeting as a couple, don’t assume that you and your partner are on the same page.

Open and honest discussions about finances establish trust and transparency among family members. Sit down with your partner to work on setting collective financial goals and creating budgeting priorities that reflect the needs and dreams of all family members. The key to monetary harmony is creating a shared financial vision that you can approach as a team. Some key tips for maintaining a healthy family budget include:

• Stay flexible so you can adapt to unexpected changes in your finances
• Be honest about your financial expectations and obligations
• Remember to work as a team to achieve your goals

Choosing a Budgeting Method for Blended Families

Unique family dynamics call for adaptable budgeting methods. After discussing your goals and obligations with your family, choose an economic system that seems right for your needs. Don’t be afraid to reassess your choice after a few months. If you don’t think your first choice is working, it’s better to evaluate and try something new than to become discouraged and fall behind on your goals.

Start by exploring the 3 “pot” methods used by many stepfamilies in Illinois. These methods vary in the way income and expenses are shared in blended families.

Common Pot System

A common pot financial system is for families that have decided to share all their expenses evenly despite one partner perhaps having debt or child support payments. The family’s income is pooled into joint checking and savings accounts, with no partner having a separate, individual account. All expenses come from the joint accounts, and every penny is treated equally amongst the family.

Two Pot System

If you want to keep your partner’s past debts and divorce obligations separate from your family finances, the two-pot method may work. In a two-pot system, partners maintain individual checking accounts into which they deposit their income and deduct non-family expenses.

Non-family expenses may include individual subscription payments, debt payments, alimony, child support, and car payments. When joint household expenses arise, couples agree to split these 50/50 and reimburse each other for paying the bill. Fifty-fifty expenses generally include the current house payment and associated household costs, joint vacations, grocery bills, and any expenses related to their children.

Three Pot System

Similar to a two-pot system, a three-pot system separates past relationship expenses from the current family budget. Individual checking and savings accounts are maintained to pay for debts, child support, alimony, and anything unrelated to the current relationship. However, rather than having to reimburse your partner for family expenses throughout the month, a third pot exists to handle joint expenses.

A third checking account, and perhaps even a fourth savings account, is created to serve as a joint account that funds the family. The third pot usually pays for family expenses such as the mortgage or rent, household repairs, grocery bills, date nights, insurance payments, pet and child expenses, and vacations. The amount each partner contributes to the third pot may be equal, but in some relationships, a partner with a higher income may contribute more.

Saving for the Future

No matter how you choose to divide expenses amongst your blended family, carve out some money each month to save together. Regular contributions, even small ones, can grow over time and help your family achieve their common goals. Saving is critical for helping create harmony in the blended family. A joint savings account can help develop a sense of togetherness and teamwork especially in couples that keep their incomes separate.

Tools and Resources for Support

At Flanagan, the financial health of our community is a top priority. We offer financial tools to help traditional, blended, and non-traditional families achieve their goals. Our financial calculators can help you analyze your family budget, speed up your debt repayment, figure out how much you can spend on a new car, and more.

If you are looking to learn more about financial topics or teach your children some important financial lessons, our financial education lesson plans offer a deeper understanding of money management for learners ages four through adult.

Create a Plan that Works for Your Family

When you’re ready to create a blended family budget, start with this family budget tracker template. Try your new family budget for a month, and then consider making adjustments to fit your lifestyle. If you need help reaching your family’s financial goals, talk to a banker or licensed financial advisor for advice tailored to your unique family dynamic. In Flanagan, El Paso, Benson, Bloomington, Le Roy, Gridley, and Pontiac, the friendly associates at Flanagan State Bank are just a call or visit away.