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Navigating the complexities of modern families and finances

TD advises the financial formula can be as simple as finding common goals and ground

TORONTO, March 7, 2014 /CNW/ - The portrait of the Canadian family continues to evolve, bringing with it potentially new complexities when it comes to managing money and finances. While married couples still make up two-thirds of all families in Canada, other family arrangements - notably common-law couples and lone-parent families - are gaining ground. As a recent survey for TD found, one in five Canadians who are separated, divorced, living common-law, remarried or widowed have either started over with a new partner or are thinking of doing so. And the most recent Canadian Census (2006) found that one in 10 children in Canada live in stepfamilies, about 40 per cent of which involve blended families. For Canadians who are considering starting over with a new partner, more than half (54 per cent) said they place a high priority on making decisions about blending their finances.

"Most people entering into a new relationship already have an established financial routine which will need to be aligned with their new partner," said Cynthia Caskey, Vice President and Portfolio Manager, TD Wealth Private Investment Advice. "Of course, opening up about finances is not an easy task, especially at the start of a new relationship, but it is essential that couples have honest conversations in order to build a solid financial future for their combined families."

According to the TD survey, for those couples who consider blending their finances a priority, the top issues to be resolved are organizing their daily finances, cited by 71 per cent of respondents, followed by finding savings and budget efficiencies (60 per cent). Nearly two in five cited opening a joint bank account as a priority, but only a third (32 per cent) said maximizing their investment opportunities as a couple was a top concern.

Avoid Future Conflicts and Disappointments

"Conversations about money can be difficult, but it's through those conversations that families can address any potential pain points down the road," said Kimberly Moffit, Psychotherapist and Relationship Expert. "Often, getting financial issues in order can help couples navigate other areas of their lives more easily and avoid conflicts and disappointments in future."

Caskey agrees, and suggests that couples starting over together should consider it a good opportunity to revisit their financial plan with an advisor to make sure both of their strategies align, maximizing savings and debt repayment while keeping the common household financial priorities on track.

Common Goals, Common Strategies

"There is a lot more to blending finances than just opening a joint bank account," said Caskey. "It's about finding common goals and working together to reach them - whether it's to save for the first trip away as a family, pay down a credit card or eventually buy a bigger home together."

Caskey suggests whatever the shared priorities, it's important to identify what will make finances easier together. To maximize efficiencies, couples can consider streamlining by making savings automatic with pre-authorized transfers into a TFSA, RSP or a child's RESP, or towards an extra mortgage or credit card payment. Above all, couples need to work together to develop a common vision towards such things as investing for retirement, putting money aside for their children's education, paying down debt and everyday spending. They also need to work together to ensure they create a safety net in the event that the new family unit encounters an unexpected life event such as a job loss.

"If one side of the family spends more on take-out meals a few nights a week while the other has traditionally put those funds toward a larger monthly mortgage payment, the difference in values could create tensions down the road," said Moffit. "I often suggest scheduling a family meeting to talk about what's important to the new family unit, and work together to find a complementary approach towards everything from integrating everyday routines to finances,"

About the TD Modern Families, Blended Finances Poll
TD commissioned Environics Research Group to conduct an online custom survey of 1,950 Canadians aged 18 years and older who are living common-law, separated/divorced, remarried, or are widows. Responses were collected between February 11 and 25, 2014.

About TD Wealth Private Investment Advice

TD Wealth Private Investment Advice is a division of TD Waterhouse Canada Inc., a subsidiary of The Toronto-Dominion Bank. TD Waterhouse Canada Inc. (Member of the Canadian Investor Protection Fund.)

SOURCE TD Canada Trust

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