Money plays a big role in love and marriage — and in divorce, should it come to it. Your household income can influence your likelihood of staying together or calling it quits. “Earning $125,000 a year or more makes divorce 51% less likely, compared to a household income of $25,000 or less,” according to Emory University and Good Housekeeping.
If you make the decision to divorce, there is no immediate end to your financial differences. The divorce process takes time and much of that time involves divvying up finances and assets. Here are some pointers to make the transition as smooth as possible, particularly when it comes to your wallet.
1. Pay Off Debts First
If possible, take care of debts before it comes to dividing them up during the divorce process. Remaining debts are typically treated the same way as assets or money. Left unchecked, you may end up splitting them equally or paying off debts in the amount or amounts proportionate to your income.
If you successfully manage to pay them off first, “You don’t have to worry that your spouse will leave you responsible for his/her portion of the debt, and you can start your new life debt-free,” The Balance advises.
2. Involve An Impartial Third Party
To ensure that financial arrangements are fair to both parties, it is wise to work with an impartial third party. Look into reliable and trusted divorce assistance, like divorce mediation services.
Remember, professional divorce assistance is a boon to both of you. Instead of stirring up more conflict, the goal of mediation is to help civilly and amicably negotiate big financial decisions that may otherwise be fraught or emotionally-charged. Working with a third party will help diffuse the situation, encourage productive discussion, and help educate you if any part of the process is not immediately clear. These services help you address nuances that you might have overlooked without assistance. For example, some assets are subject to tax and others aren’t — knowing the specifics is important when making decisions during divorce.
3. Draft A New Budget
Start keeping track of your expenses now and try to anticipate what your budget will look like post-divorce. Some couples do not follow their finances closely while married, especially if they are a dual-income household.
Use an old fashioned notebook or mobile application to record your day-to-day expenses. Refer to past budgets for a rough reference point and make adjustments as necessary. Make sure to factor in emergency savings and unexpected expenses.
4. Get Your Documents Together
Many of the delays during the legal process involve the lack of or improper documentation. Save yourself a ton of trouble by gathering the documents you need and having them ready. (Sure, a professional can do this as a part of divorce assistance services, but you’ll pay for their time and the proceedings may take longer.) Start by gathering bank statements, retirement account information, investment statements, pay stubs, credit card statements, income tax returns, and records of any current debts, including mortgage payments and auto loans.
5. Think Twice About Making Big Changes
If your divorce is particularly emotionally charged, you may be tempted to rush to the bank, squirrel money away on the side, and/or finally make big purchases your spouse did not approve of. Don’t act rashly.
Making large purchases or stowing away exorbitant amounts of money in a secret bank account can work against you. To ensure a fair agreement, do your best to be as transparent as possible and hold off on any big spending. Not only does this keep up appearances, but it is also good for your pocket. It can be difficult to pin down all expenses associated with divorce. Cautious spending leaves room for any unanticipated costs.
Do yourself a favor and carefully manage your finances in the midst of a divorce. If you cannot tackle it all on your own, don’t worry. Seeking out divorce assistance is a productive venture and one that can help you come up with several solutions. Contact us today to learn more.