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How to keep divorce from devastating your family finances

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. 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.


1. 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. It’s not about any more than simply your kids. If it is very messy, talk to someone about setting up a trust where a neutral party has control from the very beginning.

2. Agree on how you are going to handle day to day expenses. How are you going to pay for swim team, 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? One handles medical, one handles childcare.

3. 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.

4. 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.

5. Sign up for Mealpay Plus (www.mealpayplus) if your school has it. It’s a great way for any parent to pay for school lunches. They give notice if your child’s account is running low and then you don’t have to have your child home that night to notify you he/she is out of lunch money.

6. 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.

7. 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.

8. 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.

9. Meet with a tax advisor. Often times you may claim Single/Head of Household if you have a dependent. It may be worth you splitting your dependents equally or sharing them by odd and even years.

10. 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.

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