When a relationship or marriage comes to an end and there are children involved, dividing up parenting responsibility is a central issue. Learning how to co-parent effectively — meaning raising children together, even when you no longer live together — can be challenging, particularly from a financial perspective.
Raising children is expensive and co-parenting offers an opportunity to save on the big and small costs. Here's what you need to know about dividing up expenses as co-parents and maximizing savings.
Talking About Co-Parenting and Finances
Good communication is critical for co-parenting in general and specifically when it comes to money. If you were married, your divorce decree may spell out who's responsible for what when it comes to your child's basic living expenses, health care, extracurricular activities, and college planning. Talking finances may not be as cut and dry if you and your co-parent were never married.
If you're just entering the co-parenting waters, these tips can help get the conversation going:
Set Expectations Early
Talk about what you expect for yourself and from your co-parent financially as early in the process as possible. This can help avoid misunderstandings over who's supposed to pay what later.
Determine what's essential to the money conversation as co-parents and what's not. For instance, your child's private school tuition should be up for discussion but your income or personal savings may be off-limits.
Choose Your Battles
Co-parenting doesn't mean you'll always agree 100% on everything. If you and your ex can't see eye to eye on a financial or parenting issue, consider whether it's truly worth fighting over. If not, move on and focus on the things that matter most.
How to Create a Co-Parenting Budget
Having a budget for shared expenses can make co-parenting a much smoother process. Your budget should reflect all the child-related expenses you've agreed to split, and how much each of you contributes respectively. Your co-parenting budget can also include those expenses that you're each assuming sole responsibility for.
On the shared expense side, your co-parenting budget may include things like:
- Daycare or after-school care
- Babysitting services
- Extracurricular activities (such as sports, music lessons, art classes, etc.)
- Health and dental care
- Private school tuition
- Field trip, school activity, and camp fees
- Birthday parties
- Birthday and holiday gifts
- College savings account contributions
How you decide to split these expenses up depends on things like how custody is shared and the respective incomes of each parent. A 50-50 split may be appropriate if custody is shared equally and both parents bring home similar paychecks. On the other hand, a 70-30 split may be the better choice if one parent makes significantly more.
Housing and food costs also need to be factored into your co-parenting budget and again, the split may vary based on the custody arrangement, parents' income, and whether the non-custodial parent provides financial support. For instance, if one co-parent has primary custody, that parent may be responsible for paying for housing and food, with child support or alimony supplementing those costs.
You also need to think about the long-term expenses associated with raising children. The two biggest include buying their first car and paying for college. Having a written plan that covers all these expenses can help you see in black and white how costs will be divided so you can plan your budgets accordingly.
If you prefer digital money management to paper, there are some apps and tools you can use to managing the money side of co-parenting, as well as general scheduling. They include:
Smart Coparent allows co-parents to automate support payments, send payment requests, share receipts, manage your budget and cash flow, and share documents when it is necessary.
Co-parently allows you to log and manage shared expenses and create a percentage-based budget to determine how much each parent needs to pay. You can easily what both parents owe towards co-parenting costs on the go and make adjustments to your budget as needed.
Our Family Wizard
Our Family Wizard is a calendar and scheduling app that makes it easy for co-parents to keep track of dentist appointments, soccer games, and school activities. You can also use the app to track expenses, payments, and reimbursements, as well as co-parenting time.
Saving Money as Coparents
Having a clear co-parenting budget plan can make it easier to get along, and to find savings in the process.
For example, if you're both on good terms with one another's family, they could help out with babysitting, which could mean having to spend less on daycare or childcare. Structuring your visitation plan to minimize driving time can also help with managing transportation costs.
Health care can be a big budget buster so take time to review both your health insurance options to decide which plan is most cost-effective for covering kids. If one or both of you have access to a Health Savings Account (HSA), be sure to take advantage of it. These accounts let you make tax-deductible contributions, enjoy tax-deferred growth, and make tax-free withdrawals for qualified expenses.
Consider your tax filing. It might make more sense for one parent to claim kids as dependents every year, or it could save you more money to alternative claims each year. Look at your individual income, as well as the credits and deductions you're eligible for to see which offers the biggest savings benefit.
Finally, one of the best ways to save money as co-parents is to work out financial issues together, versus paying an attorney to do so. When you can separate emotions and focus on co-parenting, managing shared costs can be less stressful, which benefits parents and kids alike.