Almost everyone I know who has gone through a divorce has later admitted to making financial mistakes along the way, from blunders or oversights with short-term impacts to more serious lapses in judgment that derailed their long-term financial health. Unfortunately, in many situations, I've also seen individuals make a classic misstep that they rarely fess up to: overspending on their kids. While spoiling children in the wake of a split is common, it can have harmful effects. In addition to sabotaging your own financial goals and complicating your relationship with your ex-spouse, it can also damage your children's relationship with money.
Take John, a client I had when I was a financial advisor, who is a living, breathing example of how spoiling kids post-divorce can create problems for everyone involved. John had been conservative with finances during his marriage but after his divorce, he started spending lavishly on his two teenage daughters. While his ex-wife -- who had custody -- was struggling to pay for braces, he took the girls on overseas vacations, bought them new computers and accompanied them on sumptuous shopping trips.
At first, he felt like a hero. His kids were thrilled -- but then they began expecting dad to whip out his credit card at a moment's notice for anything. He felt pressured to please them, racked up credit card debt and fell behind on his savings goals. Meanwhile, his ex-wife was furious because her daughters resented her when she said no to requests for shopping trips or vacations. When I learned of what was happening, John and I had to have a tough conversation about changing his ways -- for his and his kids' sake.
Divorce is emotionally difficult for all family members, and it can be easy to use money as a way to try to make things easier or appear better. Parents may overcompensate for various reasons -- to assuage guilt over the split, make up for lack of time with the kids or to impress them. But spoiling the kids with money or material things won't necessarily make anything better -- financially or emotionally -- and, in fact, can make things worse.
So, where do you draw the line if you -- or your ex-spouse -- is spending emotionally?
What's normal and what's special? It's okay to occasionally treat your kids to special things, especially during a major life change like a divorce. But it's important to determine which expenses or experiences should be extraordinary -- like a splurge on a vacation -- and which should be standard and expected in the day to day. Blurring the line between the two can create confusion -- or like in John's case, new expectations. Don't set yourself up for excessive spending by setting precedents that you won't be able -- or willing -- to meet in the future.
Are you spending what you did before the divorce? Continuing to manage your finances based on a realistic budget is important to maintaining your financial health in the short and long-term. Note that your budget and expenses may change drastically during and after your divorce, so you may consider reigning in discretionary spending for you and your children. If you are spending significantly more than you did before the split, ask yourself why. From a financial standpoint, can you afford it? If not, make appropriate adjustments, and determine if there is a more budget-friendly way to channel your emotions.
Is this consistent with what your kids are experiencing with their other parent? Now that you're split, you and your ex-spouse may have different household incomes and lifestyles. From your kids' perspective, large disparities in parents' lifestyles can be confusing, especially if your children go back and forth from place to place. Determine how you can provide a sense of stability for your child. Keeping spending at least somewhat uniform between the households can help your child maintain some normalcy in a time that may be tumultuous on other fronts.
What are you teaching your kids about money? Much of what kids learn about financial values and responsibility comes from what they see you do. Regardless of your differences or the reason for your split, you and your ex-spouse still owe it to your kids to be positive role models when it comes to money. Do you want to teach your kids to use money to win another person over, gain their affection or to avoid thinking excessively about someone they care about? If not, don't engage in that type of behavior yourself.
If none of this sounds like you, but describes your ex-spouse, how should you bring it up with him or her? Money can be a difficult topic, but if you're considering what is best for your kids, it's important to clear the air. Try to keep judgment out of the conversation and focus on how to create a stable, consistent environment and positive role modeling for your children. It may take time, and you may have to speak candidly to your kids about financial expectations, but it's possible to build and maintain good money relationships over time. If you're still struggling, consider working with a financial advisor on your own finances and relationship with money and bring your ex-spouse along to help get objective advice about money disagreements.