When you’re going through a divorce, you’re going through a time of extreme stress and heartache. Divorces mean major lifestyle changes, but this transition can also have significant implications on your finances. To make sure that you’re ready for the financial changes you’ll see during and after a divorce, start planning and budgeting ahead of time.
Start With a Good Lawyer
The divorce process is rarely uncomplicated, and most divorces involve the division of property and child custody issues, so it’s important to hire a good lawyer to look out for your best interests from the start. Divorces can be uncontested, but in that scenario, a couple needs to agree about everything, including how all property is divided. It’s more likely that you will go through a contested divorce, and your lawyer can help ensure that you get your fair share of assets from the division.
Divorce can have financial implications that a lawyer can help you navigate. If you have debt as a couple, that debt will need to be divided. Depending on your marriage and individual situation, you may choose to seek spousal support or alimony from your ex. Whether or not you pursue or gain legal custody of your children can also have a significant implication on your finances.
A talented lawyer can help you to understand all of these elements of divorce and can help ensure that you get the best outcome possible during the divorce. Though you may not want to spend money knowing that you’re getting divorced, investing in a good lawyer is often a wise choice.
Create a New Budget
A divorce often upends a family’s budget, so sit down and create a new budget right away. Families can be financially valuable, especially since married family households have a significantly lower poverty rate than unmarried households. With two incomes, or a parent available to care for the children while the other parent works, married families often enjoy more financial stability than single-parent or unmarried families have.
But that’s not to say that you can’t be successful as a single parent or as an unmarried adult. You just need to live at or below your means. This will mean creating a budget and sticking to that budget so that you can accumulate savings for emergency expenses. Rather than living from paycheck to paycheck, when you live at or below your means, you’re taking steps to increase your financial stability.
To better understand what your new financial state will look like, create a household budget that excludes your spouse’s income and household contributions. Factor in all of the elements that you’ll be responsible for, from rent or a mortgage to car payments, groceries, and bills. Determine your monthly expenses, then consider whether your paycheck and any other income will pay for that monthly budget.
If your income comes up short, it’s time to determine a way to increase your income or a way to reduce your spending. Think about ways you can cut unnecessary spending, such as by no longer going out to eat, drop your cell phone plan down to a cheaper option, or by making your coffee at home instead of stopping off for daily coffees on your way to work.
Budget for Divorce-Related Expenses
Divorce brings about some particular expenses that you’ll need to budget for, too. The first of those expenses is the cost of the divorce, itself. Divorces cost $15,000 on average in the United States, which includes those attorney fees mentioned earlier. Remember, too, that this process can take time; most divorces take 10.7 months to complete.
That time can be an advantage, since it gives you a little time to plan for the other expenses you’ll face. Hidden costs of divorce include the fees you may pay to separate phone lines out from a family plan, to refinance a car loan that you may have shared with your spouse, and even to transfer your mortgage so that it’s only in one spouse’s name.
Moving is a common expense. Request quotes from multiple movers and shop around for a good deal on a home or an apartment. In addition to worrying about the financial implications of moving, remember that the experience will be stressful for the whole family, so take steps to maintain your family relationships while you move, like getting your kids involved in the process or practicing stress management techniques like yoga.
The move won’t be the only stressful part of a divorce, and chances are that you and your children could all benefit from counseling during and after the divorce. Try to set aside money for counseling sessions for your children during this time, and consider exploring family counseling sessions, too.
While a divorce will affect your finances, by planning ahead and paying attention to your changing expenses, you’ll be better prepared for the financial changes you’ll see both during and after a divorce.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.