Dealing with finances after divorce is one of the hardest task you would ever have to do after separating from your husband or wife. It only becomes a lot harder when there are kids involved with the divorce. Having to go through a situation like this is never easy for all parties concerned regardless of the reason behind the split.
CDC.gov shared that there is a 6.8% marriage rate for every 1,000 people but the divorce rate for the same number of individuals is more than half at 3.6%. If you look at the statistics alone, you can deduce that there are more people who are getting divorce than those who are staying inside marriage. More people are parting ways and having to deal with the taxing process of divorce especially with their finances.
There are a lot of reasons why people get into a divorce from unmet expectations or they just got into it for all the wrong reasons. There are also couples who cannot see eye to eye when it comes to their finances. It is possible that one of them is a serious saver while the other is also serious and devoted in spending everything they have.
If finances is already a problem in marriage which could lead to divorce, it is also one of the problems you have to figure out after divorce. Splitting debt in a divorce as well as accrued assets is a long and oftentimes tedious process. Both parties have to agree on a lot of fronts. They need to understand what will be divided and more than that, how to move forward with their lives.
Possible financial steps after divorce
Dealing with finances after divorce is not a question of if but of how and when. Huffingtonpost.com explained in an article that the average cost of getting a divorce is anywhere between $20,000 to $15,000. This is close to wedding expenses for a lot of people. This is used to cover expenses for mediation costs, court costs, neutral evaluation costs and a lot more.
But here are a few things you might want to focus on when you are looking at your finances after divorce.
- Take a look at your finances post divorce. You might have opened up a joint bank account to pay for bills at home and that is something you need to take a look at. It could be included in the divorce proceedings but you need to make sure that you split the amount evenly and there are no malicious withdrawals before the divorce procedures. You need to be fair but you need to keep constant watch of your finances.
- Look into your support system. People going through divorce proceedings needs to learn how to depend on their support system. The same way how stay at home parents depend on their support system to make their transition from office work to staying at home. Both situations can lead to a big change in income and the support of family friends especially in the early stages will be critical. Your family’s love and support could be all you need to get back up on your feet financially and start a new.
- Moving to a new place can be an option. There are a lot of people who prefers to move to a new place after getting divorced. This decision becomes a lot harder when there are kids involved but having a fresh start in life is a key ingredient to move forward. If the couple has been living in the same place for years now, they could be deeply rooted in the community as well as their kids. The challenge of moving to a new place is displacing the kids, looking for a new place to stay, a new job and even a new school for the children. But this is definitely a smart move to be able to have a clean slate.
- Reset your budget to meet your new lifestyle. Divorced couples would have a new life ahead of them. Regardless whether they move to a new place or not or get a new job or not, their outlook and even their financial goals would be a lot different. In the past, it could be paying off a mortgage loan and paying the car. But after the split, that house might no longer be a priority and getting a bigger car might not be a necessity. The budget would definitely change and consumers have to take their new lifestyle into consideration as they draft a new budget. Finances after divorce changes a lot of items from the income coming in to the expenses that has to be addressed.
- Change outlook in life. This has a lot to do with how you approach your day to day finances knowing that you are alone in the journey. You have a support system but at the end of the day, all financial decisions that you have to make will ultimately be yours to make. You need to be strong and try to have a positive outlook in life. Divorce means people made a mistake when they got married and just like any other mistakes in life, it should make you stronger and wiser.
How to approach income after divorce
One of the first things that has to be done when talking about finances after divorce is income. There are a lot of scenarios to look at and having children makes choices a little harder. But consumers who underwent divorce needs to identify their sources of income to be able to fund their budget and overall finances.
- Talk to the lawyer. After the divorce proceedings, assets are usually split in the absence of a prenuptial agreement. Once this is in effect, consumers need to understand what they have to start with for their new life. It can be the house or the car or half of the value of the assets. The important thing is that this is cleared out and both parties can walk away from the relationship with something.
- Look for a new job. A lot of people would prefer to stay with their job especially if they are either happy with it or targeting a specific perk like student loan subsidy or a vesting schedule for their 401(k). But there are those who prefers to look for a new job and start over. One thing they need is to be active and look beyond the classified ads because Forbes.com mentioned that in 2012, 80% of jobs were never advertised.
- Strategize your financial priorities. Financial fitness will become a must for people starting to rebuild after a divorce. One thing that can help is to understand new priorities in finances and focus on those. If the kids are with them, the focus can shift from a house to putting aside a significant amount for a college fund. If there are no kids involved, priorities can drastically change from saving up for a car payment to going back to post-graduate school to earn a higher degree in their chosen industry. Strategize and rebuild the budget based on new directions.
Finances after divorce is hard because people could still be pretty emotional with the whole divorce process. But in order to start a new life, the finances has to change as well. This article shares some of them which can help people dealing with divorce.