A Financially Responsible Separation
Any kind of major transition a family makes has financial ramifications. There are exciting changes, like a baby arriving, or unexpected disappointments, like losing a job. Separating from your spouse is certainly one of these transitions where your finances are front and center. As we’ve mentioned many times, divorce doesn’t need to be a nasty fight about who gets which assets, but even with the most cooperative divorces one must still consider how one’s financial situation will change following the divorce.
How To Prepare Your Finances For Divorce
1. Understand where your money is
The most helpful first step is to take stock of your assets and make sure that you understand your financial situation before and during your relationship. Financial professionals can help you with this, but regardless of which legal method you choose, understanding what your financial situation is will help you feel more confident moving forward. For many couples, one person handled the finances in their relationship, so taking the time to get up to speed is imperative.
2. Create a realistic budget
Life after your divorce will look differently, but the sooner you know how much you need to maintain your lifestyle, the better. If you’ve chosen to pursue a collaborative divorce, you can also decide to work with a financial professional on things like future educational expenses and all of the extra details you might not have considered for life after your separation. This planning will give you a good footing as you begin to discuss your divorce agreement.
3. Factor in the divorce
Even though a collaborative divorce can cost significantly less than traditional litigation, a divorce still costs something. Most people know this and will consider the money they will spend on legal fees, but there are other immediate costs to remember to allocate funds for. You might need to find a temporary or permanent residence and the costs associated with moving as a whole.
Finances are one of those topics we all wish we could worry less about. In our experience, we find that knowledge really is power in this situation. The more you know as you start the process of divorcing from your spouse, the better. Spending time understanding your current financial position and future needs will ensure that you are set up to move on successfully. One thing to remember is that this can take some time. Having realistic expectations about your lifestyle as you rebuild will help keep your goals and ideals in perspective during this period. Again, because we are collaborative professionals, we often suggest working with a variety of people (legal, financial, and family) who can make sure that you’re well taken care of throughout the entire process.
If you would like to learn more, please visit What is Collaborative Practice? or get in touch with a collaborative professional near you. You may also find some helpful information in our News and Resources.
