Handling Child Rearing Expenses After Divorce

Handling child rearing expenses after divorce can be tough, especially when those unexpected bills come up. If you get along well with your ex, the following tips offer some innovative ways of dealing with the cost of raising children.

How to Keep Divorce from Devastating Your Family Finances

by DK Simoneau

Let's face it. Getting divorced is a financial blow to any family. It is quite a touchy subject. Even in the best of circumstances there are double the housing expenses because suddenly there are two homes to support. Ah you know, two phone bills, to cable bills, two water bills and so on. When there are kids involved and split-family living becomes the lifestyle of choice for the foreseeable future, finances can get even stickier.

Innovative ways to handle child-rearing expense after divorce.

If you are on reasonable terms with your ex-spouse there are some ways to avoid common pitfalls of supporting your kids financially. If you are not, there are still limited actions you can take without having to involve the family lawyer, they just may not be as equitable.

Don't use money as a manipulator

The children will be the only ones to suffer. If you have an agreeable divorce it might be best to visit a financial planner together so that you can set up the best situation possible for your kids. If your divorce is very messy, talk to someone about setting up a trust where a neutral party has control from the very beginning.

Agree on how you are going to handle day to day expenses

How are you going to pay for swim team and who is going to write the check? How will shopping for birthdays and other holidays be done? Will you each contribute a certain amount? Who will take them shopping? Will there be a primary financial responsible party or will you divide it based on activity? Maybe one handles medical and the other handles childcare.

Establish a savings account for each child

Agree to a set amount that you will each contribute on a regular (monthly is ideal) basis. That money will be there for those "unexpected" expenses like cheerleading camp or the band trip abroad. When those events come up, you'll be able to consult and then just deduct the amount from the savings account. There will be no arguing. There will be no financial distress on either party. It will be there. It can be used.

Depending on how you set it up, this same account can pay for braces, football practice, swim team and other day-to-day expenses. See below to take this a step further.

If possible, establish a credit card that allows both parents to sign on it

That way, if there ever does come a time when you need to pay for something, you can do so immediately, without having to track down the other parent to physically give you half the funds. You could also do something similar with a joint checking account for your kids that you both are signers on. Keep in mind this will only work if both parties are fiscally responsible.

Start a college fund

This should be separate from the regular savings account. It should be money that is not allowed to be touched. Agree ahead of time of what the funds may be used for and how the money will be shared if the purpose is not fulfilled (i.e. student doesn't go to college).

Contributing monthly will really cause this fund to grow. To take this further you could start a mutual fund account or some other methodology for investing.

Buy savings bonds

There are many types and methods to choose from. There are even automated methods that you can purchase them with so that you don't have to remember each month/year to do it. They are relatively secure and they are not easily spent so they tend to last even through the penny pinching times.

Buy life insurance

Both parents should buy life insurance that will financially cover the remaining parent should one die. You can designate the money be put in a trust for your kids to be managed by whomever you choose, or have the money go directly to your ex-spouse. Work it through the same agent so the policy is similar on both sides. (Note: After your children become independent adults, you may consider naming them as beneficiaries because your ex will no longer have an insurable interest)

Meet with a tax adviser

Often times you may claim Head of Household if you are caring for a qualifying child. (Note: You must be the custodial parent to claim the Head of Household filing status.)

There are other child-related tax benefits to consider and it may be worth you splitting your dependents equally or sharing them by odd and even years.  Dependent tax deductions frequently change, so check with your accountant to determine if you can still split the dependents.

Write a will

There is so much more than just who will take custody of the kids. You both will really want to think about how you want your assets to be handled if you are not there to do it for the kids.

© DK Simoneau. DK a real-life divorced mother of two. She is now a devoted authority on living 'split-family' more effectively. The noticeable changes in her own children on transition days motivated her to create a tool to help facilitate conversation between children and on-looking adults.


In addition to sharing child rearing expenses after divorce, you can do other things to make co-parenting easier, which are discussed in the articles below.