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Actions How to Discuss Money and Kids With Your Ex-Spouse
Key Takeaways
- Keep money conversations factual and drama-free.
- Start saving for college with a 529 account.
- Protect against premature death with life insurance.
Discussing money with your ex-spouse can be awkward, but you don't want to let crucial conversations slip through the cracks just because you're no longer together. If you and your ex have children, the need for continuing conversations about finances is likely to be far higher — kids can bind you together for life, so there is rarely the opportunity for a "clean break" when they are involved. So even though your marriage is over, it's important to ensure the kids are provided for as everyone moves on from the emotional fallout of the breakup.
“Money is often the cause of arguments for divorced or separated couples, but often money is just a stand in for other issues," says Brette Sember, JD, author of The Complete Divorce Guide and divorce attorney of five years.
“For example" she adds, “one spouse might be angry the other is not spending enough time with the kids or still is hurt about the divorce."
Here's a script for starting money conversations with an ex-spouse — all while keeping the peace.
Covering day-to-day expenses
Prompt: “Here's a breakdown of the kids' expenses; this is your contribution."
If there's a decree or child support order, it will likely outline whether parents are to share certain child-related expenses such as summer camp, medical expenses and extracurricular activities, or whether the parent without custody is to cover those costs. The parent managing those expenses should keep records and receipts and share them with the other parent so there's no confusion over what was spent.
When communicating with an ex-spouse about finances, Sember recommends keeping money separate from emotional issues surrounding the split.
“It's also a good idea to be upfront and honest when talking about money," Sember says. “Don't dance around things. Be clear, concise and factual. Treat it like a business transaction."
Where possible, setting up direct payments can keep tempers from flaring.
“If your child is going to camp, you would each write your own check to the camp for your portion of the fee," Sember says. “Often it feels more comfortable to pay for something directly than to have to reimburse your ex."
The parent making direct payments or reimbursing should keep their own records, such as canceled checks, PayPal transactions or credit card statements.
Setting up a 529 account for college
Prompt: “I know we're both getting a handle on our new budgets, but the more money we save for college now, the more it will grow and the less our child will need to borrow for college."
Both parents likely want their children to attend college, but they may not agree on how to achieve that goal. Setting up a 529 college savings plan is a smart strategy because the money grows over time and can be withdrawn tax-free later to pay for eligible college expenses, such as tuition and textbooks.
“The simplest way to handle that is to make sure each spouse is contributing separately, and you can set it up so you both can access the account and view deposits," Sember says.
Protecting your kids with life insurance
Prompt: “We both need life insurance so that if, heaven forbid, anything happens to one of us, the kids will still have a roof over their heads and the ability to attend college."
Unless you have special circumstances such as a child with special needs, you may want to consider term life insurance that will cover you for a set time period such as 20 or 30 years. The idea is that, by the time the term ends and the insurance is no longer in effect, your children will be financially independent and won't need your money for food, clothes and shelter. If one parent isn't working while caring for children, that parent still needs life insurance, because if he or she dies prematurely, the cost of childcare, housekeeping and other services could be astronomical.
“For life insurance, sometimes people feel a little unhappy about having to name [an ex-] spouse as beneficiary, but the point of this is to provide backup for child support if the policy owner should die," Sember says. “It's not a windfall by any means, but a way to continue to support your children."
Keep the kids out of it
Money conversations can be tricky for estranged parents, so tread carefully and try to keep your your kids out of financial squabbles. “Don't ask your child to give the other parent his copy of the doctor's bill," Sember says. “And don't complain to your kids if you think the other parent is not being fair or is not paying what they should."
What you can do next
If direct communication with your spouse fails, there are platforms available that allow you to upload receipts, keep certified copies of expenses and more. These services can also handle money communication on your behalf, so you won't have to nag your spouse to remind them they still owe you reimbursement for summer camp.
Susan Johnston Taylor has written about personal finance and business for The Atlantic, The Boston Globe, Fast Company and U.S. News & World Report.
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