Money Saving Tips for Parents of Blended Families

Money Saving Tips for Parents of Blended Families
Written by Irina Vasilescu

According to Winning Stepfamilies, around 65% of all remarriages in the United States involve kids from a previous relationship or marriage. This forms a blended family, and the result is confusion when it comes to managing holiday traditions, finances, homes and bank accounts.

Here are a few more related statistics about blended families, according to the US Census Bureau reports:

  • In the US, 1,300 new families are being formed every day.
  • 66% of remarried couples break up when kids are involved.
  • 80% of remarried or re-coupled partners with kids from previous marriages both have careers.

Blended families do not strictly include two parents with kids from previous marriages. It could also be a household with two previously divorced parents who both have kids, and are living with aunts, grandkids, distant cousins, grandparents – the possibilities of the combination or ‘blends’ are endless.

Now, the challenge for these households is how the finances can be managed. Let’s say that you are a newly married couple with kids from a previous marriage, all of whom are living with you.

  • How can you combine your income and manage the household maintenance expenses?
  • How can you create a budget so that you can save for the kids’ college money and both of your retirements?
  • What about the emergency expenses, utilities, health care, groceries, car maintenance expenses and all the other bills that arrive on a monthly basis?

Here, we will be dishing out a few quick tips on how parents of blended families can save money.

A Quick Guide on How to Settle Your Finances as a Blended Family

When you’re the parents of a blended family, you may want to ask yourselves these questions so that you can settle your finances as a whole household:

  • How much is the overall combined income of the household?
  • What are the other sources of income (alimony, child support, part-time job salaries, etc.)?
  • Do the previous spouses (ex-wife, ex-husband) contribute towards the expenses of raising the kids?
  • How many kids will soon start high school/college?
  • How much money should be set aside for emergency expenses and the parents’ retirement?
  • What about estate planning?
  • How much money should go to savings, mortgage, insurance and medical bills?

After determining how much total income is coming in, you may decide as a couple or even as a family how the funds will be divided. An ideal scenario would be to make a budget for the expenses of the entire household. The school allowances of the kids would depend on how old they are and what their individual needs are.

However, some kids may think that this is unfair – so you all need to compromise. The individual details of how the budget should be divided are entirely up to you. But as long as you are allotting funds for both your current and future needs as a family and you are living a lifestyle that your combined income can afford, you would have a successful time at managing your money.

Top 7 Money Saving Tips for Parents of Blended Families

Specifically, here are the top money saving tips that parents of blended families should remember:

1. Create a budget and stick to it

According to the US Census Bureau, the top two reasons why people get divorced are poor communication and finances. If you would like your current marriage to succeed, you do need to prioritize communicating and settling your finances. This proves to be quite a challenge if you are a blended family, but there are ways to go around it.

The most important thing to do is to create a budget and stick to it. Using the questionnaire earlier, you can determine how much total income is coming into the house. If there are older kids who have incomes from part-time jobs, if both parents are working, or if either parent receives child support and/or alimony, all these can go towards your main budget.

After determining your total household income, you can set a budget and pay for the priority items like: mortgage, savings, utilities, groceries, insurance premiums, car-related costs, medical bills and educational costs.

Take each other’s salary into account and make sure that the budget that you will come up with is fair to all kids. Once you have finalized the budget, make sure that you will stick to it and only make minor adjustments when the situation calls for it.

2. Consider opening an interest-bearing savings account for the two of you

When you’re a newly married couple with kids from a previous marriage, you would have individual bank accounts. But now that you’re part of a combined family, you need to take the needs of your new spouse into account. A good budgeting solution would be to open an interest-earning joint account where you can both put a percentage of your salary too.

This account can be used for household expenses, vacations or other items from your budget that you need to prioritize. Naturally, you can maintain your own separate accounts which you can use as a source when contributing for your retirement funds.

3. Live below your means

It’s quite a challenge for blended families to live below or within their means – but it is something that you all need to get used to if you would like to succeed in handling your overall finances. If the kids from the husband’s previous marriage are used to buying everything they want because their mom’s salary is huge, it is something that they would have to sacrifice now that they’re part of your blended family.

Don’t buy things that you cannot afford just to earn the favor of a stepchild. Make all the kids understand that having a big household means bigger expenses, and all have to do their share in making sure that all members are cared for. Try to cut back on one or two luxury items and see just how big a difference this makes on your yearly budget.

4. Learn about combined taxes in blended families

If you’re part of a blended family whose parents just recently went through a divorce, the tax issues can get very complicated. Let’s say that a husband moved out of the house during a separation. His capital gains tax would not be the same once the house is sold because it is no longer his primary residence.

Another tax-related issue is determining which parent gets claim to the kids as dependents. If it is not specified during the divorce settlement, it could pose a problem for ex-spouses. If you need to, consult a tax preparer who can advise you how to handle taxes as a blended family.

5. Find ways to save for college

All families – traditional ones and blended – should find ways to save for the kids’ college education. For kids who are old enough to take part time work that’s suited for their age, you may encourage them to start contributing to their own college fund.

As a family, you can hold a garage sale or a bake-off within the neighborhood to generate funds for the kids’ college money. These are simply the extras – there should be a certain percentage of the household’s total earnings that should be allotted for college money.

6. Make sure that you are allotting money for retirement

No matter what your current domestic situation is, saving money for retirement is something that should not be skipped. If you failed to save money for a kid’s college education, he or she can always apply for a student loan. The parents, however, cannot delay retirement. If you failed to save up enough for it, you might need to extend your work years or you may have to live off very little during your golden years.

This is something that you don’t want to happen, so save up for retirement as early as possible. Consider paying for Individual Retirement Accounts or 401(k) plans while you’re still young because these will go a long way towards securing your future.

7. Plan your estate

Finally, parents of blended families should start estate planning as soon as possible. This might be a complicated feat if there are kids from previous marriages, but it is completely doable. A biological parent who can still buy insurance may purchase life insurance and put the funds in an irrevocable trust for the kids.

Another common estate planning solution is to setup a marital trust that will benefit a surviving spouse for a lifetime, with the remainder going to the kids. While you’re at it, also update the beneficiaries of insurance plans so that there will be no legal battles over inheritances should something unfortunate happen to either parent.

Blended families are fun, chaotic and very complicated. This is especially true when you consider the financial side of things. But with some careful planning, budgeting and a lot of planning for the future, you should be able to handle your finances without any kid or either parent feeling in the least slighted.

About the author

Irina Vasilescu

Irina Vasilescu is our crafty designer. She joined the team three years ago and is also involved in the writing process.


  • It’s so hard to figure out your needs and the income coming in when you’re part of a blended family. It always seems so unclear who is contributing towards what, who needs what and where the money is going. Communication amongst everyone is key. It might be difficult to reach out to those who aren’t a part of your household anymore but if you’re successful it will prove very worthwhile.

  • Handling my own finances is difficult enough, I can’t imagine what two families merging finances would be like. So many facets to consider.

  • Living below your means is widely regarded as very sound advice, even for traditional nuclear families. A lot of people nowadays seem to not know how to budget their expenses and count their income. It’s a shame that Personal Finance 101 isn’t taught in school.

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