Family Money Matters

We’re in the midst of some radical changes in the spheres of marriage and employment. In the twentieth century, social policy in the US was based on the idea that a family consists of a married couple with a breadwinner (Dad) and a stay at home parent (Mom). Within the past 30 years, marriage lost its dominance as the main way women make money and support their children. Nevertheless, it’s still seen as the “default’ mechanism for many families, particularly those on the two extreme ends of the financial spectrum. The two most likely groups of married women to stay at home are those married to men in the top 5% of earners who don’t need to work and women at the other end of the scale who have low earning prospects and therefore can’t afford to work.

As a custody mediator, I often see young people, particularly women, in my office who are in that second category. Typically these women have little education and few job prospects of their own. They usually hook up with someone who has a fairly low-income job. When they get pregnant, they “chose” to stay home with their young children because they can’t find jobs that pay enough for them to put their children in childcare. But then the pressure and stress of unemployment and poverty makes it more likely that their relationships deteriorate.

Now their relationship is ending and the limited financial support they had from their partner is decreased. They will get child support (hopefully) but that is barely enough to support the children. The parent’s expenses are not covered. So they have to piece together bits of moneymaking activity when their children are at school or can be watched by someone else.

In family financial mediations, I help couples equitably divide their assets and liabilities. Together we create columns for accounts and real properties that we then place under one or the others’ name. We divide the credit card bills, auto and school loans. At the end of this, a question often lingers about where each person goes from this point forward and what the future will look like. It’s impossible to equalize their earning potential in my office in an afternoon. It may have taken years to develop the inequity and it may never reach a place of balance if the couple is middle aged or beyond. While alimony takes a stab at addressing this inequity, most alimony settlements fall short of truly creating life-long financial balance, and it can’t even touch the less tangible values of work and career.

Obviously we can’t go back in time. If we could, I would tell these young people not to get themselves into that position in the first place, to stay in school and to build the skills and experience that allow them to be employable throughout their lives.  And no one wants to plan for the demise of their relationship when they are just starting out.  Nevertheless, about half of all marriages DO end in divorce and the figure is even higher for low income marriages and non-married parents.  So, I encourage new parents to consider their skills, experience and education like a bank account. If their relationship were to end right now can they balance the account so both people have (roughly) equal earning potential? If not, what needs to be put in place so that they walk away with as much income-earning ability as their partner?

This is likely to involve some serious conversations. Rather than just focusing on income and who can make more money right now, or taking the path of least resistance, I encourage parents to consider and discuss all options and then make conscious agreements about their family financial structure. This includes:

  • Desire & Aptitude –What do each of you really want to be doing? What are your natural skills? Are some better suited for staying home while others more profitable?
  • Continual Education & Experience – The parent who stays home with the children needs time to take classes, volunteer, or hold a part time job to attempt to keep the balance sheet balanced.
  • Sharing Responsibilities – In order to prioritize both parents’ careers, the parent who works outside the home will have to take care of more work at home. And, the parent who is at home has to allow and encourage this.
  • Time Frames – Consider alternating who is the primary breadwinner. Make a decision to do what you’re going to do for 1 or 3 years then to renegotiate.

For parents who are separating or see that in their future, it may be too late to balance the income-potential spreadsheet, but it’s not too late to plan for the future.

  • Develop a custody agreement that allows for both parents to work and build their careers. This will ultimately support the children’s long-term financial care.
  • Avoid remarrying immediately. Marriage helps out in the short run, but may impede a person from building a career path if it results in repeating the stay at home scenario.
  • Work as a team with the other parent. Building a career takes flexibility and support. The other parent will need to by your ally.