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Finances are an element of co-parenting that are often overlooked. Yes, you may be in the process of Calculating Child Support or navigating How Divorce Affects your Credit, but what about the extracurricular costs that pop up or unexpected medical costs?
In the separation or divorce process, creating a parenting plan that outlines agreements for child support and financial planning are important elements to consider. Depending on where you are in your co-parenting journey, these are conversations that may have already occurred. If you are in the process of filing for divorce or separating, starting to ask questions and discuss certain choices related to finances is an important piece of the puzzle.
Here are some important conversations to have with your co-parent to help make financial decisions before they become areas of contention between parents.
How will you communicate about finances?
A co-parenting communication tool like TalkingParents offers the ability for co-parents to keep all of their conversations in one, secure, and unalterable place. With the recent addition of Accountable Payments℠, co-parents can now send, receive, and request payments.
Be sure to determine in advance how you will communicate about your finances, payments, and reimbursements. If possible, discuss timelines that you will use and set these tools up in advance of your first payment.
How will you transfer and track payments?
Using one dedicated tool or service will help uncomplicate your co-parenting finances. Alternating between cash, payment services, and bank transfers can allow space for items to get lost or for reimbursements to get confused. A single place for all monetary exchanges to occur will ensure any requests, payments and receipts live in one space for easy access and reference for both co-parents to track.
How will you split costs like extracurricular activities and school field trips?
Small or one-time payments, like guitar lessons or ballet classes, and the accompanying equipment that is needed, will pop up over the years. Determine if you want to split those costs equally or have each parent pay for certain elements of the child’s life.
Who will claim the child on taxes?
The laws for taxes differ between states, but only one parent can claim each child on their taxes. Whether you plan to alternate years, split kids as dependents between households, or have one person claim them each year will be up to you.
Will you jointly plan for education past eighteen?
While parenting plans end at eighteen, when children become legal adults, post-secondary education is only just beginning. Having one parent shoulder the cost of college or school can be crippling and having no plan of time can mean years of student debt payments for your children into adulthood.
If your parents required you to fund your own education, you may believe that it was a necessary tool or a rite of passage. You can speak to your lawyer about adding contributions to a college fund, such as a 529 savings account or determine in advance which parent will cosign a child’s student loans. As Student Loan Hero notes, there are tax credits and considerations that need to be discussed ahead of time. These tax credits for college tuition will be based on who claims the student as a dependent and what each parent makes.
How will you teach your child about financial literacy and planning?
Allowances and chore rules can vary between homes, but the child will likely have one bank account that they can access. Conversations about saving, spending, and even investing can happen early on in a child’s life so that the concept of money is less daunting. You can help to prepare your kids by creating family budgets or helping them recognize the value of money.
Between co-parents, start conversations about if those financial planning lessons will be shared in both homes.
Additionally, start a conversation with your co-parent about employment for the kids. When they have reached the legal age to begin working, do you believe they should work? Does your co-parent? This can be a tricky conversation to have when the kids are older and knowing how their money will be managed is important. Will either of you have access to their bank account, and will you help them manage their paychecks? These are all questions you will need to answer together.
How will you answer questions from the kids?
Your kids may notice that one parent pays for clothing or extracurricular activities, even if you are both contributing equally. In that case, you may consider having both parents pay for certain types of expenses or letting your children know that both of their parents are paying for the things they do and support them financially. It is not necessary to break down spending or tracking techniques with the kids, but by keeping things high-level and age-appropriate, you can help them understand that both of their parents are contributing. Keeping your co-parenting communication in a tool that offers payment tools will help you reduce misunderstandings and conflict with your co-parent and make tracking and keeping records much easier. Learn more about TalkingParents and Accountable Payments℠ by signing up for your free account today.
TalkingParents blogs are for informational purposes only and should not be construed as legal advice. Always consult with a qualified attorney regarding legal matters.