How you can budget around spousal and child support after getting divorced

Divorce contains a lot of uncertainties, but how much you'll have to pay in alimony and child support can be estimated and budgeted for in advance. There are guidelines for deciding how much support is required based on factors like your income, the length of time you were married, financial need, and a family's standard of living. Here's what you need to know to prepare for future support payments.

In Canada, child support is calculated based on income, the number of children, which parent(s) the children live with, and which province or territory you live in. Judges use the Child Support Guideline Table to calculate child support. This tool takes into account factors like the parents' gross income, cost of living, provincial income tax, and the average amount currently spent on raising kids to come up with a final figure.

In most cases, the table determines how much the child support payor must pay in the event of a separation or a divorce. However, the payor can ask the courts to have the amount reduced if there are mitigating factors.

In some cases, parents might need to make additional support payments for costs like childcare, education, extracurricular activities, and medical expenses. Usually, these types of costs are divided between parents, who pay for them proportionally based on their income. Any tax credits for these expenses will also be divided proportionally between the parents.

There are different tables for each province, and they list annual income amounts by hundreds of dollars from $12,000 up to $150,000. Monthly child support amounts vary based on your income and the number of children you have.

For example, in Alberta, if you have an income of $12,100, you'll owe $8 per month for one child, but $10 per month if you have four children. If you make $150,000, you'll owe $1,318 per month for one child and $3,317 per month if you have four children.

If you make more than $150,000 in Alberta, you'll owe $1,318 per month for one child plus 0.84% of any income you make over $150,000, and $3,317 per month plus 1.88% of any income you make over $150,000 for four children.

There are three types of spousal support that you might owe after the end of a marriage or common-law partnership. One compensates a spouse who gave up their ability to earn income during a marriage. The second compensates a spouse for the lack of income they might experience for the ongoing care of children. The final helps a spouse who's in financial need because of the breakdown of the marriage or common-law partnership.

While you or your spouse might qualify for spousal support, the goal of alimony payments isn't to provide indefinite compensation. The court expects you to become self-sufficient when reasonable.

If you or your ex-spouse requests financial support, a judge will evaluate whether to grant it based on a number of circumstances, including the financial needs, means, and circumstances of both spouses, the length of time the spouses have cohabited, the roles of both spouses during the marriage, the effect of the marital breakdown on the spouses' financial positions, the responsibilities for the care of children, and any previous orders of spousal support.

An alimony award is most often calculated using the Spousal Support Advisory Guidelines. However, these guidelines are only a suggested rubric that family court judges often use.

The guidelines have formulas for calculating support payments with and without child support. For example, without child support, you'd be required to pay between 1.5% and 2% of the difference between your incomes for each year of marriage, up to a maximum of 50%. If you've been married for 25 years or longer, you need to pay 37.5% to 50% of the income difference.

The amount of time you'd need to pay ranges from 0.5 to one year for each year you cohabited, with indefinite support required if the length of the marriage is more than 20 years or if the years of marriage and the age of the support recipient adds up to over 65.

While these guidelines help judges calculate both the amount and duration of alimony, what you'll actually have to pay can vary. The period of time you'll be required to pay spousal support to a former spouse may depend on the length of time you've lived together and your ages at separation. In some cases, spousal support is paid for a limited amount of time and in others, it will continue unless there's a change in circumstances, such as a new job, an increase in income, or remarriage. At that point, a court order or agreement by both parties is required for a change in the amount of spousal support.

Since calculating spousal support can be complicated, you might consider seeking legal advice for an estimate of what your spousal support order could look like. You might also negotiate an amount with your spouse outside the courts and pay out your spousal support obligations in a lump sum. Many couples choose to do this since the recipient won't have to pay taxes on the lump sum but will if they get a monthly alimony cheque.

Knowing a rough figure of much you'll owe in spousal and child support prior to legal separation is important because it will help you understand how much you have leftover every month for your own living expenses. The last thing you want to do is sign a yearlong lease on an apartment or buy a new home that would be unaffordable once you factor in your support obligations and the division of your finances and debts.

To create a budget, get estimates of how much you will owe in support. Remember that while child support isn't tax deductible, spousal support is. After that, put aside up to 30% of your income to pay for housing. Divide the rest between common expenses like transportation, debt repayment, medical expenses, utilities, food, entertainment, savings, and any other personal or familial expenses you'll take over during your separation or after your divorce.

Make sure to put money aside to pay for a lawyer and include an emergency fund for unexpected divorce-related expenses. Knowing that you have a plan that includes everything in your budget will help you navigate this challenging time, and better understand what your financial future will look like so you can start planning for it.