How will you divide up your cash? And what kind of impact will a divorce have on your overall financial situation?
The article below will overview the impact divorce can have on your finances, and give you a few tips to bounce back.
Standard of Living
If your spouse made most of your money prior to the divorce, you might face a decreased income and lower standard of living. In particular, women’s standard of living can decline up to 30% after a divorce. This means lifestyle changes for the affected parties and the children who live with them.
Along with losing some income, a divorce might mean losing your insurance policy if it came through your spouse’s job. This can mean that both the spouse and children lose insurance benefits. As a single parent, you’ll likely spend more on childcare than you did previously, and your kids might miss out on certain extracurricular activities due to tight finances.
Most divorce lawyers do their best to charge reasonable fees. However, divorce is still expensive. You’ll need to pay legal fees. You might have to sacrifice time at work to meet with your lawyer, go through mediation, or attend court hearings. Amicable divorces cost less than contested divorces, which require you to invest much more time and money.
Depending on the divorce’s outcome, you might need to pay child or spousal support, which can deplete your finances as well.
In some states, all assets acquired by either partner over the course of the marriage must be divided equally. In other states, assets are divided according to equitable distribution, which means the court often considers external factors when dividing assets.
When you divide your assets, you’ll have to discuss more than just your house and car. You’ll have to talk about individual furniture pieces, TVs, books, movies, and other items. Depending on how many of these assets your spouse retains, you might need to invest money into refurbishing your new home or purchasing a new car.
Protect Your Finances
No matter your divorce’s outcome, your finances will certainly take a hit. However, this doesn’t mean you need to resign yourself to poverty. Before you file your papers, carefully review your financial situation. Read through your current insurance policy to find out how it could change. Look at your savings and make a list of all your marital assets.
Next, make a financial plan for your post-divorce life. Look at where your finances stand now, estimate how much of your income will drop, and factor in additional expenses you expect to accrue during and after your divorce. You may need to rein in non-essential purchases or cut some expenses to make ends meet. If necessary, start looking into affordable housing and cars, and make a list of employment opportunities to explore.
Finally, discuss all of your financial questions and concerns with your lawyer from The Peck Law Firm or a firm in your area—he or she can explain financial issues you don’t understand and help you protect your financial interests.
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