Managing family finances can be among the most challenging aspects of parenting, and for single parents, sharing the financial obligations of raising kids with your ex can be even tougher. How co-parents manage the shared costs of raising kids can range from amicable and transparent to downright frustrating.
Wherever you are along the co-parenting spectrum, here we break down the challenges you may face, and offer tips on how to effectively share the financial responsibilities of raising your kids. We also spoke with certified life coach, Alicia Robertson, who coaches women through divorce and is the founder of Lemonade Life, to share her insights.
What is co-parenting?
Co-parenting is when two parents living in separate households and continue to share the responsibilities—and joys—of raising their children. “Co-parenting is a strategic partnership where you can become aligned on values and goals that focus on the needs of the children,” says Alicia, who encourages strategies that focus on collaboration and mutual responsibility towards the kids.
What are some of the financial challenges of co-parenting?
There are a myriad of benefits to a healthy co-parenting financial arrangement, however building and maintaining one isn’t always easy. If you find you’re struggling to find common ground with your ex, it may be due to one or more of the challenges outlined below:
Disagreement on kids’ expenses
Finding agreement can be tricky in the best of times—just think about the last time you and a friend had to select a restaurant to eat at! Add the pressure of money, kids, and a potentially strained relationship with your ex, and it’s no surprise friction can surface during communications.
Separation agreements typically clarify basic shared expenses such as food and shelter, however, there are countless additional expenses that arise that may not be covered in the agreement. From braces to rep sports, and music lessons to cell phones, what you believe is a necessity, the other may perceive as frivolous based on their own values. Without agreement, one of you may be required to foot the entire expense, or your kids simply go without—both of which can potentially lead to negative feelings.
Competition between parents
While not ideal, some parents may fall into the habit of competing against one another to spend more money on their kids. The motivations may be based on the need to make up for less time spent with the kids, or to prove they’re the “better” parent. Whatever the reasons, kids may quickly learn to play parents off one another to get what they desire– not an ideal skill to master.
Despite your best efforts to plan for expenses, there are instances in which big expenditures suddenly pop up. From sudden healthcare costs for your teen (like braces) to replacing a broken cell phone to making the school’s varsity team, such unplanned costs may cause financial stress for one or both parents if money is tight.
Change in one parent’s financial situation
The financial situation at the time of separation often evolves or may change abruptly over the years. If employment is terminated for one parent, child support payments may need to be reviewed to accommodate the loss of income. Conversely, if one parent’s income increases significantly, the other parent may want to revisit how expenses are shared. Either way, one parent’s financial situation often impacts the other and can suddenly hinder how much cash flow is available to spend on the kids for one or both co-parents.
Now that your kids live in two separate households, the difference in values between you and your ex may become more apparent. Your perceptions of money may be based on very different values and agreeing on what’s essential versus a luxury can be challenging after separation. These differences can also affect your kids’ allowance and chores.
7 tips to help co-parents manage finances successfully
While you may not overcome every co-parenting struggle, there are useful strategies to help ensure your kids’ needs come first as you navigate the travails of co-managing finances. Here are some tips to keep in mind.
1. Accept you can only control your own finances
To build a collaborative co-parenting arrangement, it helps to remember you can only control what happens in your own household. The key is to ensure the children’s needs always come first, even if you address them differently.
“How you choose to get there in each of your own homes will look different,” Alicia says. “We don’t have control over the other home.” To maintain what Alicia refers to as “a stable and able” environment for the kids, she emphasizes the importance of keeping individual judgments and opinions of one another out of the conversation. “You can foster a partnership that is aligned on what matters and also focus on what it is that you can impact.”
2. Determine your shared expenses
As co-parents, you can eliminate the potential for conflict by determining all the shared kids’ expenses. Certainly, unexpected costs for the kids will come up periodically, but providing a baseline for those you agree upon sets a solid foundation for collaboration later.
Rather than spend time convincing one another of the merits of every single expense that you, personally, think your kids need (or will need in the future), try focusing on where you find agreement. This can include day-to-day expenses, as well as those that you know will arise over the next year or so, such as technology, extracurricular activities, tutors, and school trips.
3. Know your financial situation
Understanding your financial situation, and particularly your cash flow, is key according to Alicia. “A lot of times we don’t want to take a hard look at our finances and where the struggles may be,” she says, and recommends understanding your financial plan regardless of how tough the truth may be to accept.
“Be informed and feel capable of managing your finances,” says Alicia who keeps her personal finances, home finances, and children’s finances in separate accounts for simplicity.
4. Create a co-parenting budget
The thought of a budget can quickly overwhelm any parent, but keep in mind it need not be a 10-page colour-coded spreadsheet. The goal of a shared budget is to help both of you plan for expenses and maintain a clear picture of how much is spent, and by whom. A regular review of a shared budget can also help verify if the split between co-parents is equitable—particularly important if one parent’s income is much higher than the other’s.
Tracking your individual expenses for the kids is also a useful practice, even if it may seem like a lot of work at first. The more transparent you are with one another, the better your argument for updating the arrangement if you feel you’re covering more than the agreed-upon expenses.
5. Use co-parenting technology
There are a number of apps that can make managing finances as co-parents easier. Some features include automated support payments, managing shared expenses, and even shared calendars to keep track of kids’ appointments and events.
There are a number of co-parenting apps available, including Cozi. This free app helps co-parents manage school events, doctors visits, vacations, and your kids’ schedule. Our Family Wizard was one of the first co-parenting apps created for parents. It helps co-parents stay up-to-date on expenses, schedule, and communication. There’s a message board where parents can leave notes about upcoming events. The app costs CAD$125 per year and there’s a 30 day money back guarantee. WeParent helps co-parents manage schedules, events, appointments, documents and photos. There’s a 14-day free trial and costs US$9.99 per month, or US$99.99 per year.
6. Plan for post-secondary education
Although university or college may be years away, it can be costly when the time arrives (sooner than you realize). As co-parents, saving for post-secondary education should be discussed while the kids are young. Opening a Registered Education Savings Plan (RESP) offers an added benefit: the Government of Canada contributes 20 cents on every dollar you add to the RESP, up to a certain limit.
A financial advisor can help you determine the ideal contribution amount per child, how much to contribute (monthly or annually), whether you’ll each contribute equally or proportional to income, and if you’ll both contribute into the same RESP account or open separate ones. Lots of decisions, so don’t delay!
Read more about how to pay for college or university.
7. Keep kids out of the conversation
As much as possible, avoid discussing financial woes in your co-parenting relationship. “We want to keep an environment for your kids that’s stable and able,” says Alicia. “Talking judgmentally about the other home to your kids or sharing your opinions on how things should be ‘over there’ is not productive or healthy for them.”
There’s nothing wrong with discussing finances appropriate to your child’s age. In fact, you may choose to work with your ex to teach your kids the value of money by showing a united front with regard to their needs vs. wants, allowances, and chores.
How can co-parents communicate effectively about finances?
This is the time to set aside personal differences and keep your conversations focused on the kids and finances. Easier said than done, we know… that’s why we’ve provided some useful strategies to navigate your co-parenting conversations (be they in person, over the phone, or even by email).
Set a business-like tone
When it comes to finances, speaking to your ex as you would a colleague is ideal. Keep your discussion cordial and neutral, even if you feel triggered by something that’s said. “If something is off with your child, or you’d like to see something changed, focus on your child’s situation,” says Alicia. “Take the opinions, judgments and emotion out of it so you can engage in powerful conversation on what’s best for the kids.”
Keep conversations kid-focused
Keep the conversations centered on your kids’ needs, and resist the temptation to lay blame or pass judgment on one another when discussing finances. It’s easier to find common ground when the focus remains on what’s best for your kids rather than how your ex’s in-laws are too meddlesome, or recalling past events to prove a point.
Focus on what you can control
“What I find is challenging for some parents is staying in your own lane,” says Alicia, who emphasizes concentrating on what you, individually, can impact. If you and your co-parent can’t agree on certain expenses for the kids, it’s best to immediately let go of any resentment and frustration. You can later determine whether you can cover the expense personally, or not.
Talk or meet regularly
Your children’s expenses evolve over time as their needs and interests change, as do your own financial circumstances. Although you may not want to talk regularly with one another, too long a gap between correspondence can lead to unpleasant surprises if one co-parent suddenly shares a big change in expenses or support payments. The more frequently you can discuss your kids’ finances, the more likelihood you’re in alignment with current and future expenses. It also helps build a trusting and respectful (albeit business-like) relationship.
Show understanding in difficult circumstances
Financial situations can change abruptly for either co-parent and that can be stressful for both of you. Despite your differences, remember that co-parenting is a team sport and finding ways to support an ex during a financially trying time will benefit your kids in the long run. Treating one another with respect and empathy can help build a productive co-parenting relationship, even after the hardships have passed.
How you manage finances as co-parents can benefit the kids
Although managing finances as a single parent can be challenging, a collaborative co-parenting arrangement that prioritizes your kids’ needs can alleviate some of your financial stresses. Open communication, a clear understanding of your finances, regular correspondence, and financial planning can all lend to a productive co-parenting relationship that will benefit your kids over the long-term, and maybe even your wallet.
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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
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