It’s going to cost thousands of dollars to get a divorce. Experts estimate the average divorce can cost $15,000, but the real cost will come after the divorce as the couple is forced to maintain two separate households.
High costs of divorce
This means any expenses you had which were divided are now covered by one person, including retirement savings, housing costs, utility bills and insurance. But while the living costs will rise relative to your income, discretionary income will remain the same, which means you will have less extra income to save each month.
So what do you need to help put you back on firm financial footing after a divorce? There are certain steps that you can help. Experts suggest the first step is to understand where you stand financially. Unfortunately, it’s not unusual for one partner to do most of the financial planning and pay most of the bills. If that person is not you, you have some work to do to make sure you understand your financial status.
Before your divorce gather bank statements, tax returns and credit reports. Find out your debts and income status. After you understand your financial position it’s important to talk to your lawyer and understand how your assets will be split. Some states require assets acquired during your marriage to be divided evenly, other states will consider other factors before distributing property.
Start saving for your future
The next step is to find a professional to help you. Many divorces now are not confrontational and you can work together with a mediator and your spouse to divide your assets. If you have a complicated financial situation or a spouse who is not willing to work with you, you will need to talk to a divorce lawyer to help ensure you do not make costly concessions in the negotiation process.
Understand what you are giving up in the divorce. Experts suggest there are several factors to consider, such as whether or not you have a balanced portfolio and whether you have maintained the right percentages while divvying up retirement funds.
Next, it’s time to consider the children. Divorce is generally hardest on the kids and while the courts will do their best to ensure their standard of living is maintained, it’s important that your divorce agreement clearly outline how expenses will be handled for the children, including medical costs and college tuition.
Finally, after the divorce is completed make sure you have a strong financial plan which is consistent with your new income and household costs. It might be time to review your taxes, your insurance needs, and your retirement savings. You will also need to review your will and make sure all the proper beneficiaries are named on your accounts.
Divorce can be devastating. It is also a common reason that individuals declare bankruptcy. Make sure you take the proper steps before, during and after your divorce to solidify your financial position so you can avoid a financial crisis.
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