For many individuals, getting divorced forces them to dive deep into the world of personal finance . . . sometimes kicking and screaming. It is a necessary part of everyday life, though, and everyone needs to have a decent understanding of money. As a divorce mediator with specialized credentials – I am Certified as a Divorce Financial Analyst™ -- I spend a lot of time making sure that both parties to a divorce have the requisite financial knowledge to move forward with their lives as independents (not married).
Children, too, often get an unanticipated education in family finance when their parents get divorced. Unfortunately, that education is often based in the negative: that there is less disposable income after the divorce than there was before . . . and how much that hurts . . . and whose fault it is, etc.
Why not turn it around and use your divorce as an opportunity to teach your children about money in a positive way? It is probably a big topic in your life, as you move through the divorce process, and kids can feel their parents’ stress. Oftentimes, knowledge is power and you may find that teaching your kids about personal finance and budgeting basics may help them to deal with some of the changes their family is enduring.
Depending on your children’s age and your comfort level with sharing family financial information, divorce is a great time to teach your kids about how to spend, how to save, and how to be smart with their money. In the turbulence of divorce that exists for children, they can exit as wiser and more educated when it comes to personal finance.
Here are my top five financial tips for children in divorce.
- Limit special purchases (new toys, eating out, entertainment, etc.) as rewards for special achievements. Instead, use story time, TV time, and one-on-one conversations as rewards at the end of the day. This is both an opportunity to save excess income and spend more personal time with your children.
- Share your paystub with your children. Show them how much of your earnings go to taxes, social security, and insurance. Answer any questions they have about what that means and why you do not get all of the money you earned.
- Make sure your children understand “business smarts and connections” just as much as they understand “hard work and the American Dream”.
- Live within your financial means. Talk with your kids about what that means. This can be done without creating unnecessary anxiety about “going into poverty”. Let your children join the conversation, ask them where they think the family could be saving money, or where money might be better spent.
- Don’t be afraid to share your past financial mistakes with your kids. In the end, a major key to financial success is learning from your mistakes and improving your habits. Let your children know that making a mistake is okay, but that repeating those same mistakes over and over is what gets people into financial trouble.
Educating your children on smart finance is an important factor in their development as responsible members of society. Going through a divorce is difficult, but using it as an opportunity to improve your children’s financial confidence is a positive outcome. By using these tips, you can take the first steps to starting a financial dialogue with your children and having something good come of your divorce.
By Steven Seril, Mediation, Marketing & Research Assistant &
Robin Graine, JD, CDFA