24 Feb 9 Tips for Navigating the Cost of Divorce
Divorce proceedings are different for each couple, but they are in general an emotionally and financially challenging experience. While untangling your lives, it is easy to feel overwhelmed by mounting expenses. However, with thoughtful planning and practical steps, you can effectively manage and reduce the financial strain that often accompanies divorce.
With these nine tips for navigating the costs of divorce, you can stay in control and make informed decisions.
1. Create a Realistic Postdivorce Budget
One of the first steps in navigating the financial aspects of divorce is to create a new budget tailored to your changed circumstances. List all your current sources of income and recurring expenses, including rent, utilities, childcare, transportation, and groceries.
Next, consider how these expenses may change after the divorce. For example, will one of you move to a new home, or will there be new costs like alimony or child support? A clear budget can help you prioritize needs over wants so you are prepared for your new financial reality.
2. Gain Clarity on Shared Assets and Debts
Dividing assets and liabilities is a critical component of divorce that can significantly impact your financial future. For a complete picture of marital assets and liabilities, organize the following financial documents:
- Bank statements
- Property deeds
- Retirement accounts
- Outstanding debts
Once you account for everything, evaluate the division carefully. Decisions about selling or keeping shared properties, dividing retirement accounts, and paying off joint debts deserve careful thought. For instance, if you are considering keeping the family home, make sure you can afford the maintenance and taxes on your own.
Adhere to Legal Advice
For specialized guidance on which assets are relevant to your divorce and how to divide them fairly, seek the legal advice of client-focused lawyers. Couples divorcing in Washington State can turn to the lawyer at LaCoste Family Law for an attorney that handles cases of family law in the Tri-Cities, WA, area.
The legal team at this office know the state’s laws concerning divorce, asset and property division, child support and custody arrangements, and more. Turn to this team for help in understanding the tax implications of your decisions, correctly presenting any expenses, and receiving a fair settlement that respects your legal rights and suits your finances.
3. Minimize Unnecessary Expenses
Divorce often leads to emotional purchases, like splurging on things you feel you deserve after a difficult day. While understandable, these costs can add up quickly. To avoid unnecessary spending, focus on financial discipline:
- Delay big purchases, such as cars or vacations, until after you settle the divorce and your finances stabilize.
- Assess subscription services and monthly commitments to cut back on anything nonessential.
- Select simpler services during the divorce, such as less expensive phone or internet plans.
Taking a step back and prioritizing what truly matters can help you maintain financial stability.
4. Sell Unused or Shared Items for Extra Cash
Divorce often means sorting through belongings, so use this opportunity to sell items you no longer need or want. Unused furniture, electronics, or duplicate household items can bring in extra cash to offset legal fees or post-divorce expenses.
Use platforms like Facebook Marketplace, Craigslist, or eBay to find buyers, or organize a garage sale to unload multiple items quickly. Not only does selling declutter your space, but it also provides a financial boost during a tough transition.
5. Think Twice Before Fighting Over Material Items
It can be easy for you and your soon-to-be-ex to become caught up in disputes over who gets what, especially over sentimental items or expensive belongings. However, prolonged arguments about physical possessions can rack up comparable costs in fees. Ask yourself, “Is this worth fighting for, or will the costs outweigh the value of the item?”
6. Assess Insurance Policies
Divorce often affects health, life, and car insurance policies. If one spouse previously had coverage under the other’s employer-sponsored health insurance, they will need to find a new policy. Additionally, you will need to revise any life insurance policies that name your former spouse as the primary beneficiary.
Take the time to compare plans so you have adequate coverage moving forward. Additionally, explore cost-saving options like bundling auto and home insurance policies for discounts.
7. Update Your Financial and Estate Plans
Once the dust settles, it is crucial to review and update your financial and estate plans. Many people tend to overlook this step, but it is essential to prevent unwanted surprises. Update the following:
- Wills and trusts by changing your beneficiaries and ensuring your estate plan aligns with your post-divorce intentions.
- Bank accounts by closing joint accounts and opening new ones in your name, as sometimes, unnecessary fees can arise from leaving accounts open in limbo.
- Retirement accounts by revising beneficiary designations after deciding how to divide these accounts during the divorce process.
By staying on top of these updates, you will protect yourself and simplify future economic management.
8. Be Proactive With Child-Related Costs
If you and your former spouse have children, child-related expenses can be a major factor in the divorce process. Custody arrangements, school fees, extracurricular activities, and future college savings need careful thought and planning.
Refer to your family law attorney. They will help you legally guarantee the best possible outcomes for your budget but with a focus on your child’s rights so they can maintain their lifestyle and have their needs met as they did during your marriage.
9. Plan for Your New Financial Future
Divorce can be an opportunity for a financial reset. Work with a financial planner to create a roadmap for your post-divorce goals. This might include rebuilding savings, investing, or buying a home. Establishing a clear plan can reduce anxiety and give you a sense of control over your future.
Set short- and long-term goals. For example, start with small savings milestones for the next six months while keeping larger aspirations, like homeownership, in focus.
Ending a marriage is undeniably complex, but by carefully following these nine tips for navigating the costs of divorce, you can mitigate its financial challenges. Creating a realistic budget and being mindful of your priorities will put you in a stronger position to move forward. Remember, the financial decisions you make now will play a key role in shaping your future stability and well-being.
