For most people a divorce is a stressful and unhappy time. Occasionally it's a very happy time, some divorcing couples even invite all their friends to a celebratory divorce day party. Whichever camp you fall into a divorce can wreak havoc on your budget.
If You Haven't Divorced Yet
If you've kept and maintained a detailed budget for some time before your divorce, kudos to you and you'll find many aspects of sorting your finances out all the easier. If you haven't divorced yet and you haven't kept a detailed budget plan in your records you should begin to immediately. When couples split apart there is usually a fairly complex disentanglement of debts and assets which is so much easier when you have an organized and accurate reference system. Where there are issues around support payments or other money-related conflicts it is extremely useful to have spending habits to refer to, particularly where a standard of living within the marriage needs to be demonstrated.
Common Divorce-Related Expenses
Amicable divorces are much cheaper than the average wedding, but they can still be expensive, even more so when there are contentious legal issues requiring many hours of legal expertise. Here are some common expenses a divorce can provoke:
- Legal Fees
- Down payments for additional housing
- Moving-related expenses
- Household items often need to be purchased to furnish an additional abode
- Sometimes a vehicle needs to be purchased
- Settling of debts
During such a stressful and life-changing event, developing a very clear budget plan around divorce expenses is essential to avoid creating a mountain of financial stress, which is the last thing you need at such a time. Hopefully, you've been budgeting and saving all along and have a cushion to fall back on, but whether or not that is the case it is very important to create a solid budget plan so you can watch your divorce-related expenses and avoid making things even more difficult.
Budgeting After a Divorce
If money issues were a contributing factor to the divorce itself, you may find yourself in a rough place financially in the aftermath of the divorce proceedings. There is no benefit to be overwhelmed by despair, there is the benefit to coming up with a financial plan that gets you into recovery as quickly as possible.
The first thing you should do is the first thing we think everyone should do when life situations change: develop a realistic budget based on your current situation as it is. Once you've created your budget, then it's time to seek some advice.
A financial planner at your bank would be an excellent place to start. Your new beginning may be a humble one, it's not uncommon for recent divorcees to start from scratch with merely a basic savings account, but a financial advisor at your bank will probably have helpful advice on ways they can help you build up your credit and your relationship with the banking institution itself. They may offer debt consolidation services to help you save money on interest rates. A meeting with your bank should be among the first steps you take towards financial recovery and goals after your divorce.
Another important step is to make sure you update the paperwork and titles of all of your assets and financial paperwork. Make sure your financial stakes are thoroughly divorced too! Examples include insurance policies, your will, close up joint bank accounts, utility accounts, and credit cards. This financial disentanglement can be tedious work, but it could spare you any number of surprises and disruptions in your new financial future.
Important Actions to Do Before/During a Divorce
- Close Joint Accounts / Open new account (transfer your income)
- Pay Joint Credit cards accordingly
- Go over all the Finance accounts and Assets
- Check Investments, Insurance and pensions
- Keep a direct line of communication with your lawyer to avoid the imbalance of power or any unfairness.
More details to pay attention to when a relationship is in trouble.
-check all accounts to make sure they are paid up or someone may be left paying them off after the divorce is finalized. It also may show some poor or improper money management.
-close any joint banking accounts. Open accounts in your name alone. It may not go over well but it is for better control.
-close any joint credit cards. Figure out who owes what as well before closing them down. Record the amounts. Check your area to see who is really responsible for the debt.
-When a split in a marriage is possible, each partner should go over all of their financial accounts. Check their status carefully. Get clarification on any irregularities. That means any irregularities. Don’t ignore or think they might not be important. If need be get proper clarification from experts just in case there is a negative or a major long-term impact on one of the couple.
-Some issues may not look like they are impacted immediately because they aren’t in normal life but in divorce, issues need to be cleared up immediately. Things like pensions and retirement plans need to be solved now, not later. They must also be totally understood by both parties. Get it in writing what might happen so proper decisions can be made.
Remember to not allow one person to dominate the proceedings.
If one person doesn’t understand the ramifications then wait until they do.
Also, get a written list of all current costs and further costs that will impact each person.
Go over the list again and again until it is well understood.
It is amazing how many people get stuck with issues later on that they thought were all cleared up earlier on.
The internet is full of information about relationships. Don't be afraid to check out any info that may help.