Problems in a couple’s relationship are already a significant test of stamina. However, it is always accompanied by both moral and financial issues.
Unfortunately, the number of married couples who divorce only increases every year. Not all of them can solve all financial issues that arise independently and without problems.
Divorce is a painful process; you must prepare for it in advance. It changes your whole life, its organization, the process of saving and distributing finances, child custody, and much more.
The issue of redistributing your budget during a separation or preparing for a divorce is complicated. Still, it would be best if you resolved it with a cool head, and the following tips will help you do that.
1. Take stock of your situation
You have to start somewhere. Pull all the financial information together to get all the information you need about the state of your affairs. You should obtain and review these documents:
- Statements of your checking and savings accounts (past year).
- Reports from your retirement accounts (current, assuming your contributions have not changed).
- Statements of investment accounts (past year).
- Ledgers for all your loans, such as your mortgage, personal, and auto loans (past year).
- Statements for credit cards (last year).
- Latest paystubs.
- Lists of the debts and assets each party brought into the marriage and those accumulated afterward.
- Return of income taxes (past three years).
Relying on your circumstances, you may choose to complete this level alone or with a partner. These financial accounts may already be closed or be closing soon, depending on where you are in the separation process. It is wise to obtain statements, open your bank accounts, and speak with a lawyer as soon as possible.
2. Count your income
Your income is your responsibility now. You now have no one else to lean on. Think carefully about the financial outcome of your divorce proceedings. Will you be able to supply for yourself and your children? You need to add up the money from all your sources of income for the month. It could be salary, investment income, interest on a deposit, or revenue from business activities. Don’t include money you don’t have now but may receive in the future: alimony, bonuses, or overtime wages. Let them become a source of repayment for additional unforeseen expenses.
3. Keep track of your expenses
It’s more critical than ever to keep track of your expenditures. Once you know your approximate earnings for the month, it’s time to move on to allocating money to meet your needs. Keeping track of your expenses will help decide property division and alimony awards in court.
Your expenses will be divided into fixed and additional costs. Fees for groceries, clothing and medications will be considered fixed. They will also include rent or mortgage payments, taxes, transportation, and utilities. You can’t change how much you spend, reduce it, or get it down to zero. You can only save money on groceries, utilities, and clothes.
Additional expenses include money for dining out, vacations, gifts, holidays, repairing or buying home appliances, etc.
When determining the estimated amount of your payments, look to previous periods. But remember that in the past, you made expenses from joint money and for everyday family needs.
4. Financial support for children
One of the most challenging issues is supplying for the children during parental separation and custody. It will be easier if you can negotiate with your partner and agree to voluntarily determine who and how much you will pay for the children’s expenses. The children’s interests must come first. When setting a budget for the kids, you should consider how much daily expenses are. Financial matters like rent, food, shopping, clothing, school supplies, and field trip expenses should be shared by both parents.
In addition, pay attention to the need for emergency or regular medical care.
When planning an overall child care budget, figure out how you will pay for school or private daycare and extracurricular activities for the children.
5. Don’t make significant financial decisions
Once you decide to divorce or separate, we advise you to refrain from making life-changing financial decisions. It does not mean that you no longer have access to joint money. However, try not to make significant, unaccustomed expenditures that could play a destructive role during the division of assets in court. Proceed with your personal and joint accounts as usual.
Remember that debts accumulated before the marriage must be paid by the one who got them. The couple together must pay the joint debt.
6. Seek help
Spouses can seek help from either a lawyer or a financial advisor. It depends on the partners’ relationship and how they want to divide the assets: amicably or through the courts.
Both couples can benefit from the guidance of a financial counselor with experience in divorce as they sort out their finances together. They can aid in reorganization, the establishment of new credit, management of joint bank accounts, and the development of a post-divorce settlement budget.
If the financial counselor cannot solve the couple’s problems, you should seek the help of a lawyer. He will help resolve the issues and describe the judicial prospects. Bypass communication with your spouse in person, saving your nerves. An attorney will do that for you.
Without a doubt, the process of budgeting for your new life without the financial support of your spouse is complicated enough. It gets even more complex if you can’t reach a consensus on how to allocate expenses, including for children.
To come out victorious after your divorce or separation, make an effort to solve your financial problems on your own.
Saving money and earning a decent income will help you do this.
Take advantage of the free time you have to look for a second job, develop your high-income skills, become a freelancer or independent contractor, and take advantage of all the remote work opportunities.
It will also help you get over the breakup psychologically and financially.
