Divorced comes with many challenges. But often, one of the biggest is figuring out how to divide child care costs evenly. Doing so can be difficult, especially with today’s high cost of living increases.
According to 24/7 Wall Street, it only cost slightly more than $25,000 to raise a child in the 1960s. But now, expenses have since skyrocketed. It now takes approximately more than $200,000 to raise a kid from birth until age 18. What can make factors even more complicated is that many young adults are still financially reliant on their caretakers.
This can leave some parents with a sense of fear and uncertainty. That’s because it’s often difficult to raise kids on separate incomes. However, with the right planning, they can devise a plan that works for them, their bank account and their kids.
Financial approaches divorced parents can utilize
While many divorces having varying circumstances, there are ways parents can deal with their situation. Here’s how they can approach the matter:
- Implement an efficient system: In some cases, spouses have very different levels of income and spending power. For example, if one spouse makes $67,000 annually and the other makes $33,000 annually, the spouse who earns more typically pays for more of a child’s necessary expenses. If one parent is adamant about having their child take piano lessons or join a sports team, that parent pushing those activities should be the ones footing the bill.
- Make sure kids understand each parents’ financial situation: Depending on each parents’ income, children may ask why one parent can give more or less than the other. While this can be difficult at times, parents should attempt to discuss these issues with their children gracefully. When kids understand what’s going on, they can better manage their expectations with each parent.
- Decide who owns the 529 plan: If the parents opened a tax savings account for their kids’ college funds, only one parent typically gets ownership of it after the split. If couples can’t decide what they’re going to do with the fund, they may want to hold or freeze the account until further notice.
It’s essential to think about the children’s future
In any divorce, the child’s best interests should always be top of mind. While some separations may be more agreeable than others, parents must understand the impact their words and actions have on their children.
