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Why a child support order needs a COLA clause

On Behalf of | Dec 22, 2021 | Child Support

Numerous factors go into determining how much child support one co-parent must pay the other. Even if you and your spouse are working out your support agreement yourselves, there are basic factors you’ll need to consider, as will the judge when they sign off on the agreement, which makes it a court order. 

These things include:

  • Each parent’s income and other assets and expenses
  • The child’s basic needs, including education, housing, food, clothing and health care
  • The standard of living the child had before their parents’ break-up

One or more of these things can change over time. A parent could lose their job or become unable to work, for example. Of course, children’s needs change and the cost of raising them generally increases as they get older. Therefore, it’s likely that at some point you’ll need to make modifications to your child support order.

One thing that’s certain to change over the years is the cost of living. That’s why many judges will require a cost of living adjustment (COLA) clause in any child support order they sign. That clause stipulates that the amount of payment will increase (typically annually) by the same factor as a particular economic indicator of the cost of living.

How is a COLA determined?

Often the Consumer Price Index (CPI), which comes from the U.S. Bureau of Labor Statistics (BLS), is used to determine COLAs. The BLS defines it as the “measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.” CPI data is also available that takes into consideration fuel for vehicles, utilities and other items 

Of course, the cost of living varies significantly by state and even within states. Therefore, it’s important to make sure that any COLA clause in your child support, as well as any spousal support order, will work for your and your family’s financial needs. If you’re the one paying support, of course, you also want to ensure that it’s fair. This can be a crucial aspect of any support agreement.