We’ve been taking time out here at Yielding Wealth to occasionally have Linda Leitz, author of We Need to Talk: Money and Kids After Divorce,  answer some reader questions. We are on our final question:

I’d like to give my kids an allowance to teach them to manage money responsibly, but they get money from my ex whenever they want it. How can I teach them that money won’t always just “appear,” and that they need to learn to manage what they have properly?

Here is Linda’s answer:

This is a difficult issue.  And kids generally know how to work each parent.  If the kids are spending a good amount of time with you, there will be some items that you allow them to have only at your house.  That’s one way to teach them how to save for things.

In regard to allowance specifically, decide what they’ll be allowed to spend the allowance on and discuss that with the kids.  Then have the allowance stay at your house, along with what they buy with it.

Kids with both parents in the same household sometimes get conflicting life lessons about money, too, so this isn’t just a single parent issue.  If you talk with your children, without forcing your preferences on them, and give them some hands on experience with making some financial choices with money they control, they’ll learn from it.

Everyone has their own money personality and sometimes it’s difficult for people (of all ages) to make wise decisions about money.  Have open communication with your kids about money, don’t judge them or your ex harshly for decisions you disagree with, and don’t bail them out of their financial mistakes.  They’ll still grow up to be comfortable with who they are with their own decision capabilities.

Linda Leitz, author of We Need to Talk: Money and Kids After Divorce, has been answering some personal finance questions from readers lately. Today is a look at the third installment:

Q. I want to make a family budget, but am unsure of how to begin. What should I do to get started?

Linda offers this answer:

First, figure out what you spend now.  Ideally go through at least six months of checking account and credit card records.  If you have one of the computer programs that can track spending, it’ll be easy to download all your accounts, then categorize what each item is.  Be sure you look at what you charge on your credit cards.  Don’t just assume a credit card payment is, well, a credit card payment.  What did you charge it for?  Clothes?  Eating out?  Gas?  Groceries?  If you’re paying down a credit card balance, that can be considered a debt payment - which you should attack with as much zeal as you can muster.  But the individual charges you make need to be categorized with that spending category.

Then look at what you have little immediate control over - housing, utilities - and put those in as fixed items.  Then look at what you have more control over - eating out, entertainment, vacations - and decide what you want to spend on those.  If you’re having trouble making ends meet with adjustments to these discretionary items, don’t be afraid to consider changes to the “fixed” items.  Adjust your thermostat or look for less expensive housing.

And don’t forget to be willing to attack the other side of a budget - how much comes in.  If you’re underpaid, be willing to look for a job that brings in more.

Linda Leitz is a certified financial planner. You can find her online at www.lindaleitz.com.

We’ve been doing a special Q&A series with personal finance planning expert Linda Lietz. Today she answers a question about personal finance planning and divorce:

Q. I have been working for most of my 12 year marriage. Five years ago I received a raise, and am now responsible for earning about 60% of the family income. My husband contributes the rest. If I divorce my husband, will I have to pay him alimony?

A. That could be a possibility, but doesn’t sound likely.  Alimony, which is also known as spousal maintenance, is blind to gender.  It’s based on two factors in most states:  the need of one spouse and the ability of the other spouse to pay.  Since most families pretty much use all their combined earnings between what they spend and what they save, both of spouses need to make some adjustments when they set up separate households.  When the separate households have incomes that are comparable, then alimony might not be an issue.  If both households can manage on what they each make, then alimony isn’t usually an issue.  If both households are going to have to make downward lifestyle adjustments, it’s also unlikely alimony will be an issue unless one spouse makes quite a bit more than the other.

Also, in a marriage of 12 years, the length of time alimony is paid could vary.  In some states, 12 years is considered a pretty long marriage.  In others, a marriage needs to be around for 20 years to be considered long term.  So how long alimony is paid depends on how long the court system considers the marriage to be relative to that court system’s standards.

If there are children, child support will be assumed to be an issue in most cases.  In a situation like yours, if the kids spend an equal amount of time with you and with your father, you would probably owe him child support.  The same would be true if they spent most of their time at Dad’s house.  If the kids spend most of their time with you, their dad will probably pay child support, even though you make more money.

If you’re considering divorce, make an appointment with a financial professional that works in the divorce arena.  They’ll know what the range of outcomes is in your location.

Other posts in this series:

Pay Debt First? Or Save?

Not too long ago, Yielding Wealth ran a contest in which readers submitted questions to Linda Leitz. Leitz is the author of the book We Need to Talk: Money & Kids After Divorce. Throughout the rest of the month, I will be posting her answers to the four best (and most common) questions I received.

Today’s Question: I only have a limited amount of extra money each month. Should I concentrate on paying down debt first, or putting money aside for savings? 

Linda’s answer:

It depends some on how big your debts are.  If you owe a substantial amount - let’s say a third of your annual income - in credit cards, put 75% of what you can pay toward your credit cards and put 25% in savings.  If you owe less than a third of your annual income on cards, divide what you can pay pretty equally between debt and savings.

With your credit cards, pay the ones with high interest rates first, paying the minimum on the lower interest rates until the high rate cards are paid off.  You can do some balance transfers for low rates, but not too often.  Opening too many cards too often can lower your credit score.  When you get the cards paid off, put all of the money you can into savings.  Keep that habit up and you’ll be less likely to end up with credit card balances in the future.

And don’t worry about paying off your mortgage aggressively.  If you have a good, long term, fixed rate mortgage, it can be a good use of your funds to pay the payments as agreed, but not worry about paying it off.

In conjunction with the release of the book We Need to Talk: Money & Kids After Divorce, we’re having a contest at Yielding Wealth this week. Don’t forget to email me your personal finance questions. So far, I’ve been getting some good ones.

There is some good personal finance advice in this book, even for those who are not divorced. Here is an excerpt from the book by Linda Leitz.

Let’s start with a basic assumption: Only I Control Me. That means that when it comes to the final decision on what you do and don’t do, you’re in control. It doesn’t mean that you can create unrealistic choices, but you are able to choose from your viable alternatives. As you digest the concept of Only I Control Me, you’ll begin to see that all your choices might not be obvious at first glance.

********************************

It’s in you and your children’s best interests that you and your ex communicate and coordinate your finances regarding the kids as much as possible.  But sometimes, despite all efforts, your ex just won’t work with you.  You get your facts together, present a proposal, compliment your ex on how important his input is, and he says he’ll get back to you, but never does.  Or you mutually agree on a financial commitment, but he doesn’t follow through with his part or tells you at the last minute that what you both agreed to do doesn’t work for him.  Or he tells you what you “have to” do and doesn’t want to discuss other alternatives.  You’re not alone.  And just for the record, I’ve heard from plenty of frustrated dads about obstinate, selfish moms.  This is not just a Y chromosome issue.   

I have a female client with two kids that are now both in elementary school.  Her divorce was such a financial blow that she declared bankruptcy.  A couple of years after the bankruptcy and divorce, she’s able to pay her ongoing bills and start saving for the future.  Her ex needs to be on medication for mood stability, but doesn’t like taking his meds.  Because of these ongoing medical problems, he’s had trouble holding much of a job and he has never paid child support since their divorce. 

Mom has come to the realization that pushing Dad for payments won’t make the money appear.  He’s barely able to pay his individual expenses.  He lives with friends and doesn’t have dependable transportation, so the kids aren’t able to spend time with him regularly.  As much as she hates having to make ends meet for herself and the kids without the financial help he’s legally supposed to provide, her bigger concern has become that the kids miss him and worry about whether he’s ok.  He now has a job at a place where he knows when his breaks are going to be, so once a week or so, Mom and the kids go to where he works around his lunch time.  She brings sandwiches for the kids to eat and they sit and have lunch with their dad. 

She’s realized that her situation is not what she wants it to be.  But blaming it on her ex will only upset the kids and make them uncomfortable about expressing their concerns about their dad.  She hopes that some day, either he’ll be in a better situation or the kids will learn to accept his limitations.  Either way, Mom has realized that the best thing to do for her and the kids is to do the best she can with the money she can earn and to try to keep the kids in touch with their dad. 

This mom is coming to grips with a sense that the father of her children is struggling with his ability to do what he needs to do just for himself.  Trying to control him will only make his situation worse, which will worry the kids more.  Her living in accord with Only I Control Me means that she has developed a budget she can single-handedly fund for herself and her kids.  It also means she wants her kids to have some peace of mind about their dad and she makes an effort to try and provide that. 

Even the best of separate household co-parenting relationships will have some issues that Mom and Dad just don’t agree on.  And some parents will find themselves with an ex who won’t agree on anything and seems to intentionally disagree just for the sport of it.  There’s an old joking analogy that points out the futility of an action.  “It’s like trying to teach a pig to dance.  It accomplishes nothing and annoys the pig.”  I’m not suggesting that your ex-husband is in any way comparable to a pig that can’t dance. 
Efforts to force your ex to do something that he doesn’t want to do can often result in nothing but annoyance for you both, and an unflattering show for anyone watching.  And bemoaning your sad situation doesn’t accomplish anything either.  Go back to your brainstorming efforts to look at all the alternatives that you have and find the ones that allow you to live “Only I Control Me”.  Only you can bring the independence and autonomy to your life—including your parenting—that you deserve.

Linda Leitz, CFP, Pinnacle Financial Concepts, Inc., Colorado Springs, Colorado, is author of We Need to Talk: Money & Kids After Divorce (March 2008) and The Ultimate Parenting Map to Money Smart Kids (2006).  She specializes in helping families and individuals meet their long- term financial goals.  She also helps those in the midst of divorce resolve financial issues through her company Divorce Solutions, Inc.  She can be reached at 719-260-9800 or Linda@LindaLeitz.com.

This week I am running a contest here on Yielding Wealth. In conjunction with the release of We Need to Talk: Money & Kids After Divorce by Linda Leitz, CFP next month, there will be a special Q&A series with your questions answered by a personal finances professional. You can win a copy of the book by emailing me your personal finance questions all this week. Deadline is Feb. 29 at 11:59 pm Eastern Standard Time. Three winners will be randomly chosen to receive a free copy of the book.

I am very excited about this book, since it is aimed at teaching basic personal finance truths. And I am excited to get your personal finance questions and have them answered by Linda. So email me with your personal finance question. I can’t wait to read it — and have it answered!