27 Jul How To Budget for Child Support Payments
Child support payments are a serious responsibility. Failing to pay can subject a divorced parent to severe repercussions, including being held in contempt of court, fined, and even jailed. An award of child support and the corresponding obligation to pay creates a new and essential line item in your monthly budget. Learning how to budget for child support payments is essential.
Both Parents Should Budget
Child support is designed to maintain the standard of living that a child is accustomed to so while residential time may be balanced, leveraging the income to maintain that lifestyle can be challenging. In some cases of shared physical custody, the courts will look at how much time the child (or children) spends with each parent and the parents’ comparative income. The parent making more money will likely be required to pay more child support, even if the parents share physical custody evenly. The paying parent must adjust their budget accordingly.
The parent who receives child custody payments must also adjust their budget to ensure that child support money is appropriately applied to items specifically for the child. Washington State child support law requires that child support orders include a statement that the parent receiving payments may be required to account for how the money was used to benefit the child.
While it rarely happens, it can be wise for the parent receiving child support payments to maintain a record, and receipts, which show how child support money was spent and how those expenditures benefitted the child so should the court ask or the paying party challenge the amount, it can be substantiated. Figuring how much of monthly income must be spent for the benefit of the child or children versus how much can be retained for parent support is a budgeting task that all parents receiving child support should assume.
Adjusting monthly expenditures to account for child support payments can be tricky. Job loss or changes that affect the monthly income for the parent paying child support can create stress. When something significant (or “material,” as the courts may say) changes that affects a parent’s ability to pay child support, that parent can petition the court to modify the child support order.
Similarly, when the parent receiving child support suspects that the paying parent is hiding assets, has new or increased income, or when supporting the children as they grow becomes significantly more expensive, that parent too may petition for a modified child support order. Either way, learning how to budget for child support payments is essential for divorced parents.
Budgeting for the Parent Paying Child Support
Write down all sources of monthly income you’re sure will come in each month. For parents who freelance or do gig work, use a realistic estimate of an amount you can count on each month.
Then, it’s time to make a list of your expenses. The parent required to pay child support has one advantage: unless a court modifies it, the amount the parent is required to pay is fixed. It should be the first item on your balance sheet under “expenses.”
Make a list of all the rest of your fixed monthly expenses, like mortgage or rent, car payments including insurance, and utilities, including cable and internet service. You should also include your best estimate of monthly credit card payments and the amount you must save each month to pay property taxes if your home is paid off and you’re no longer paying into an escrow account with your mortgage company.
Add a line for a realistic estimate of how much you spend on other basic needs, like food, clothing, transportation (gas and car maintenance), and necessary household items.
Subtract your fixed expenses from your fixed income. Anything left is your “discretionary” amount for recreation, entertainment, or eating out. If there’s no discretionary money left, you’ll have to cut expenses until you can add additional sources of income.
Even if you lose your job, you’ll still be required to pay child support unless you can convince a judge to modify the child support order. Divorced parents paying child support may have to take on two, even three, jobs to make ends meet until they can land a single, higher-paying job.
Budgeting for the Parent Receiving Child Support
The first thing the parent receiving child support should do is to make a monthly budget based on their income alone, excluding child support. This way, the receiving parent can plan to live on just their income and avoid becoming dependent for their own necessities on payments meant for the benefit of their child.
Next, calculate the monthly cost of taking care of the child. Include food, clothing, recreation, education, and health care. Remember, child support is not intended to be an income source for the parent, but to contribute to maintaining the status quo a child is used to. The receiving parent has just as much of an obligation to support the child as the paying parent.
If you have found that your financial situation has significantly changed, as it does when one household becomes two, , it becomes necessary to exert strict discipline over your spending. Eliminate as much discretionary spending as possible, including “cutting the cord” by ending cable TV services and relying on less expensive streaming options. Look at ending health club memberships, replacing expensive personal care items with less costly alternatives, curtailing eating out, and cutting spending on clothing you don’t need.
If your income doesn’t cover your basic expenses, you may need to find additional sources of income (such as an additional job) or downsize to a more affordable lifestyle. Before you decide to make a significant change like that, it’s essential to consult a child support lawyer. In Washington State, an experienced child support attorney may be able to advise you on whether enough time has passed to modify your original order or if it is in your best interest to keep it the same. If it is, your lawyer can petition for a modification of the child support order, supported by the evidence you have collected that the current amount is insufficient and a reevalutiaon is necessary. .
When parents end their marriage, their mutual obligation to their children continues. Eventually, you’ll be able to settle into a comfortable routine that provides for your children without impoverishing either one of their parents.