How to budget for child support payments

What is child support?

When parents with children decide to end their marriage or relationship, there are a lot of hard conversations about money that need to happen. Divorcing or separating parents need to determine a custody arrangement for their children and potential financial assistance for the parent who receives primary custody. This financial assistance is known as child support.

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It’s a court-ordered ongoing payment with a goal of both parents contributing to the financial costs of raising their children. The individual laws vary from state to state, but there are a few basic terms that parents should know:

• A custodial parent has primary custody for the majority of the time.
• A non-custodial parent generally refers to the other parent, who does not have physical custody of the child or children but does retain legal custody as a parent.

These terms are only intended to indicate who has primary custody. Either parent may have primary custody and the way that the time is split up may be up to the courts and each parents’ lawyer. In many cases, the parents want what’s best for their children and will remain involved in their children’s lives while co-parenting amicably. No matter how custody is determined, the goal of child support is to ensure that the financial responsibility of raising children is evenly split between both parents.

What is child support used for?

Child support payments are intended to be used to maintain a living standard for a child and make sure that all their basic needs, like food, medical and school expenses, and clothing, are taken care of. In addition, these payments can be used for other things in the child’s life like sports camps.

Considerations when creating a budget that includes child support

Before we get into the particulars about budgeting there are a few considerations to think about regarding child support payments.

The first is that it can be modified. Child support is not a one-size-fits-all solution. There are several factors that are taken into account when considering what a monthly payment would be including each parent’s income and the amount of time each parent spends with the children. Other considerations include childcare, health insurance, and educational expenses, which can fluctuate in cost. Additionally, if circumstances change and one parent loses their job, becomes disabled, or comes into a large sum of money, the family can return to court to adjust the payments.

Secondly, child support payments will trump spousal support payments. When one spouse makes more money than the other, a court will usually order alimony payments to help offset that financial difference with the goal of helping both spouses preserve their lifestyles. However, if child support is also on the table, it will almost always take precedence. This means that if the courts determine that child support payments can be reduced, alimony payments will also be reduced.

How to incorporate child support payments into your budget

Whether you’re the recipient of the these payments or the one making them, creating a monthly budget can help you spend and save wisely. There are a few different ways to think about how you’ll put your budget together:

• Figure out your income as well as fixed and variable expenses.
• An easy way to track your expenses is by using a tracker template in Microsoft Excel.
• Rein in your grocery spending by learning about the average monthly cost of groceries.
• If you’re concerned about how you’ll adjust to your new financial situation, learn how to save money.
• Avoid overspending by trying a zero-based budget, which finds a home for every dollar you bring in.
• Talk to a financial advisor to ensure that all your accounts are in order.

Remember that each state has its own set of guidelines for determining child support payments. If you and the other parent are on good terms, try to come to an arrangement that benefits both of you. If the court finds that what you’ve come up with is in the best interest of your children, they may deviate from the guidelines in your favor. While divorce or separation can be touchy subjects, it’s important for both parents to look out for their children and frame conversations about money appropriately.