These days, divorce is relatively commonplace. In the United States, for example, over half of all married couples call it quits, says the Centers for Disease Control and Prevention. This relationship option sometimes can truly be the best route in terms of personal safety and happiness, but from the financial literacy standpoint, it can be a real challenge to your kids.
Why is divorce such a big deal for kids’ financial literacy?
In many divorces, judges award alimony, child support or both to one parent. Sometimes, kids can come to see these payments like a paycheck, always expecting them to be there and not realizing that they won’t necessarily have such financial assistance later on. Other children, who in other areas get the message that it’s great to be independent, don’t understand why one spouse is getting help from the other, or why a judge might feel that one spouse is entitled to benefits.
Divorces are often amicable, but it’s also not unusual for them to be harsh. Money often turns into a tool to manipulate or win arguments, and kids sometimes come to see finances as a continual source of conflict. This sometimes turns kids off from handling money, because they don’t realize that the assets aren’t really the main problem.
Another problem is that some parents use the assets they have acquired during marriage in their financial lessons or plans for their children. The assumption here is that those items will be available later, but depending on where a person lives, property law might mean that this is not the case. Many parents end up without the resources they thought they were going to have, leaving them scrambling to come up with money for college or other child-related investments. Often, parents and kids end up needing a crash course in budgeting, scholarships and similar areas.
With so much other drama going on before, during, or after the divorce process, some parents don’t have the time or money to really teach or invest for their kids, as well. They are so mentally and physically exhausted that financial literacy becomes a back-burner subject, especially if the divorce ends up requiring them to work more hours to make ends meet. Many parents in this situation are well intentioned and want to teach, but they are limited logistically.
The Bottom Line
A divorce might not be nice, but statistically, it’s hit or miss whether you will have to go through it. Given this fact, it’s worth taking extra steps to ensure that your children learn about money regardless of what your family goes through. You can:
- Make a pact with your spouse to take a joint approach to money education
- Make a conscious effort to explain how alimony and child support work and why they are economically and socially beneficial
- Set up independent accounts for your child without your spouse’s name and funnel assets into that account, AND/OR
- Set up a trust for your child—the trustee has a duty to remain objective and will ensure that your child’s assets go to your child regardless of what is going on between you and your spouse
- Set up a specific schedule for talking about money at least once a week so finance doesn’t fall by the wayside
- Involve your child in everyday money tasks
- Get in the habit of using tools like books, bankaroo and other resources that aren’t actual money to discuss and practice finance with your child—using these resources is possible regardless of the money the divorce leaves you with
- Get help from friends, family and community programs that can introduce your child to money ideas or provide practice
These tips don’t guarantee that everything goes smoothly during your divorce, but they can help your child through the transition, providing information, practice and security of current assets.