Managing a blended family: crafting a financial for two families that merge through marriage is serious business. Here's how to do it right

Black Enterprise, Feb, 2004 by Sheryl Nance-Nash

FROM THE OUTSET, KOFI AND YVETTE MOYO FIRMLY BELIEVED that their union would add value to all members of their growing brood. Combining his eight children and her one child could have easily led to emotional upheaval and financial discord--but the Moyos had a plan.

First, they adopted the concept of a village raising a child. Yvette and Kofi needed unity to raise nine children (who now range in age from 18 to 33) over their 15-year marriage. The couple garnered support from both sets of grandparents as well as Kofi's former wives and Yvette's former partner. Some of the children stayed with the Moyos full time for a stretch, but Kofi and Yvette didn't have primary custody. The children would journey from Cincinnati to join them in Chicago for the summer months, weekends, holidays, and birthdays. "We had a commitment to harmony," maintains Yvette.

So, how did the Moyo's keep their financial house in order? Yvette, 50, an advertising sales and marketing executive, and Kofi, 64, a photojournalist, author, and amateur chef, quit their jobs to start Resource Associates International (RAI), a marketing firm best known for its Real Men Cook for Charity fund-raising events, and the Marketing Opportunities in Business and Entertainment (MOBE) conference series. The company grossed annual revenues of approximately $600,000, generating enough income to support the growing clan and pay for everything from summer camp and family trips, to child support and the first year of college tuition for everyone. (By the second year, the children have to pay for their tuition by working or gaining scholarships or other rotors of financial aid.)

Next, the family went on an austerity program. "I shopped at Burlington Coat Factory instead of downtown at Lord & Taylor," Yvette explains. Furthermore, Kofi is a frugal and savvy shopper. For example, he drives a mint condition 1988 Land Cruiser that he purchased online. (Yvette owns a 1971 Mercedes, which is also in excellent condition.) Over the years, they have been able to realize more savings since Kofi makes repairs around the house. "We gave up luxuries like new suits and expensive stuff and settled for what mattered," says Yvette. "[The children] knew we creed for them. If one of them had a prom, they'd go and I'd do without if necessary. The priority was to expose them to a variety of things and make them feel good about themselves."

As the Moyos demonstrate, bringing two households together--each with its own culture, traditions, financial habits, and values--is no small matter. Entering a new relationship with children, former spouses, and expanded financial responsibilities can be downright daunting. But many couples are willing to take on the challenge. According to the Lincoln, Nebraska-based Stepfamily Association of America (SAA), about 75% of divorced people eventually remarry and about 65% of those remarriages involve children from prior unions.

While the divorce rate is nearly 62%, blended families can and do succeed. Making it work, however, requires a strong commitment from the couple--to each other and to the newly formed family.

Poor planning and disagreement on goals ca n quickly unravel recently constituted stepfamilies. For one thing, the second or third time around, finances can be an even greater issue since both spouses usually have more assets, more debts, and contradictory money-management styles. Also, asserts Marilyn Bergen, a certified financial planner with CMC Advisers in Portland, Oregon, "the children may have very different spending habits and values. How will you get everyone on the same page?

ACHIEVING FINANCIAL HARMONY

Few things are as unromantic as finances. Before you get too deep into the prospects of marital bliss, you must engage in straight talk about money. There are a myriad of issues to deal with, including child support, prenuptial agreements, property ownership, retirement finances, and estate planning. First, you need to gain a full accounting of your loved one's assets, debts, legal issues, and tax liabilities. "You want to know what sort of verbal agreements they may have, say to help pay their parent's prescription drug costs, or to buy a child a car," says SAA President Margorie Engel.

Take a good look at each other's spending habits. "Poor spending habits are often what caused the first marriage to break up. You should work to come up with a common financial plan and a debt-elimination plan," advises Pierre Dunagan, president of The Dunagan Group, a Chicago-based financial services firm. "Commit your plan to paper. Having a document that you both agreed on and signed makes a huge difference. It's a little hard to dispute."

Dunagan says once couples are married, they should schedule weekly or monthly meetings to review the family's finances. The two need to determine whether financial goals are on track or, if not, factors that have stalled progress. Other issues include deciding how money will be managed. You should answer the following questions before you take the plunge: Will you have separate accounts, joint accounts, or a combination of the two? How much will each contribute to household expenses?