It’s well-documented that divorce is one of the most financially stressful situations a person will ever face, regardless of one’s role in the marriage, and yet many people still enter into the divorce process without a clear sense of the tumult that they are in for. While it is hard to fully prepare for everything that might come your way in a divorce, here are five basic strategies to lower the risk of ruined finances during a divorce.
Get a Clear-Eyed Picture Of Your Personal Financial Situation
Maybe you were never in charge of your finances, or maybe you did not work or took your spouse’s second income for granted. Regardless of what your financial life was like during the marriage, it is going to be different following the divorce. Instead of two earners and two spenders and one shared dwelling, now there is just your income (raised or lowered by spousal support), your spending, and your own individual costs of rent, utilities, and so on. Many married couples can afford not to have worry too much about finances, and this inattention to finances can persist for a few months following separation, only to result in a very rude awakening. Take the time now to fully understand your new financial picture before you do irreversible financial damage.
Make a Budget Now and Stick to It
Similarly, two-income households can often enjoy a financial “cushion” that allows them to spend freely, but when the second income is gone while the rent remains, that cushion can become a huge gap that gets filled in with credit card debt that quickly adds up. Maybe you have never had to stick to a budget or even had the need to learn how to create one. To protect yourself and avoid financial ruin down the road, start creating and sticking to a budget now.
Avoid Making Big Life Changes for the Time Being
For many people, divorce is a new beginning that opens up new opportunities for education, career choices, and even geographical locations. You should absolutely use your divorce as a launching point for making your dreams a reality, but hold off for a bit before making emotionally-charged and costly life decisions until you have a clear sense of your financial picture and future. If you do not know how much property you will have after the divorce, or whether you will be on the receiving or paying side of a large spousal support award, then it is not yet the time to quit your job and move across the world to open your bakery in the south of France. Be patient, and steadily work towards those goals with prudence and they will be more likely to come true.
Resist the Urge to Engage in Retail Therapy
When dealing with the loneliness, anger, and confusion over a divorce, it is only natural to want to distract yourself from the pain by going on a spending spree, especially when money issues were a part of the marital problems. Certainly, you do need to treat yourself from time to time, but avoid making unusually large purchases or spending money that does not fit in your budget. Not only will it hurt your financial picture in the long run, it may raise legal problems in your divorce when it comes to property division and spousal support matters.
Invest Wisely in an Experienced Family Law Attorney
Facing divorce can be financially traumatic, and the idea of hiring a lawyer can sound expensive and intimidating compared to simply trying to work your divorce out yourself. But, without the legal guidance of an experienced family law attorney, you may be setting yourself for far more costly problems in the long run. An experienced family law attorney will help make sure your financial issues are treated properly and fairly under the law with regard to property division, spousal support, and child support, and will not let the other spouse take advantage of you in settlement discussions or at trial.
For guidance in all aspects of divorce in California, please contact the Law Office of Kelley Finan at 424-255-3797 to schedule a consultation.