With a divorce on the horizon, many people panic about their future financial situation. Property division, spousal support, child support and the division of debt responsibility play a significant role in determining the overall financial picture of both parties post-divorce. You are wise to take steps in the weeks or months leading up to your divorce that will put you in a better situation in the future.
Even though every situation is unique, here are four financial tips that might make your future more stable:
- Create a budget and carefully track expenses: It is easy to get lost when finances are co-mingled. From spouses pooling both incomes into a shared checking account, to different spouses handling the payment of specific bills, it might be hard for the parties to have a clear picture of how much money is coming into the house – and how much is going out. With a budget in place, you can start to see how your finances flow.
- Anticipate future expenses: With a detailed budget in place, you can begin to anticipate what your single life might ultimately cost. You can use the current budget to anticipate your future budget. Carefully examine expenses such as utilities and other bills and gauge what type of income can cover these expenditures.
- Collect all financial paperwork: It is crucial that you take the time to gather documentation centered on your finances. From credit card statements and checking account information to retirement funds and lists of marital debt, it is important to have a solid idea of what you will face through the divorce process.
- Avoid huge financial changes: This can mean many different things. From increasing your 401k contribution a significant amount to using the joint savings to clear personal debt, any type of big move should be carefully considered. Not only can this complicate the property division aspect of your divorce, but it might give your spouse ammunition in various negotiations.
While the divorce might be the best solution for your future, your financial stability will likely take a hit. Marriage allows couples to share finances – pooling income and splitting debt. Going from a positive financial situation to an unstable one can be a challenging transition. No matter the specifics of your unique divorce, it is wise to seek the guidance of trusted professionals.