3 Ways to Manage Kids’ Expenses after the Divorce
November 1, 2020

Certain mandatory shared children’s expenses are defined in the CA Income and Expense declaration which include: child care for job training and/or work, medical care, special educational needs, and travel related to visitation.  But what about other expenses such as extracurricular sports, private school, orthodontia, tutors, birthday parties, even haircuts?  In mediation and Collaborative processes, you can decide with your co-parent which expenses you are willing to share and how you will share them.

Often, these expenses will be shared either 50/50, relative to each parent’s NSI (Net Spendable Income, or what is left after taxes to pay your expenses) or at any other agreed upon percentage.  It is advisable to define exactly what expenses will be shared and have a clear understanding that both parents will agree to.  Sometimes both parents’ values are not aligned in what is considered a reasonable expense. For example, if one parent would really like to buy the child a new iPhone and the other parent believes the old flip phone is sufficient for emergency communication and this is not an expense he/she is willing to pay, then one parent can agree to pay for the phone and can’t force the other parent to participate in this expense.

Often, there is also a limit to an expense as related to the agreed upon list.  If the expense should exceed this amount, approval must be given by the other parent.  For example, the parents agreed to share in the cost of special occasion clothing and Suzy finds a prom dress but the cost of $200 exceeds the agreed upon $100 limit on any one expense, then the parent shopping with Suzy should confer with the other parent before purchasing the prom dress.

3 suggested ways of managing these expenses include:

1. Maintain a joint checking account and fund the account at the agreed upon percentage when the account falls below an established threshold.  For example, the account is funded at 60/40 and when the balance falls below the minimum $500, $1,000 will be added, $400 by one parent $600 by the other.  A joint credit card is optional, to be paid off monthly by funds in this checking account.  This is the easiest method, but of course, both parties must be comfortable maintaining a joint account.
2. Keep track of expenses incurred on paper, excel or email and “settle up” on a monthly or quarterly basis.  This can become quite tedious but is a common option.
3. Use an app or software for this purpose.  2houses.com and MyFamilyWizard are both options but do have a monthly fee.  A free option might be an expense sharing app e.g. Splitwise which was formulated for vacation expense sharing but can also be used for this purpose.  You can use the latter app to take photos of receipts, designate % sharing and keep a running total as well as settle up via the app.

Susannah Malek is a Certified Divorce Financial Analyst in Marin County.  More information in her bio on the “Find A Professional” page.