When filing for divorce, you will likely encounter additional expenses, including attorney fees, litigation costs and other expenses. You may also be trying to figure out how to pay for your living expenses if you or your spouse moved out. This is a critical time to figure out your budget and how your divorce will impact your finances. This preparation can also help you anticipate needs you will have in the future so that you can address them during your divorce.
The first step to managing your budget is to gather information about your finances. This information can provide useful insight, especially if you have not been the primary partner to handle finances. Begin this process early, even before you actually file for divorce, if possible. This information may go missing after the filing or may be more costly to track down if your spouse is not cooperative. Gather the following documentation:
- Last year’s statements of checking and savings account statements
- Most recent retirement account statements
- Quarterly investment account statements for the past year
- Loan documents, including the original and the most recent
- Last year’s statements of credit card statements
- Last month’s statements of pay stubs
- Income tax returns for the last three years
- A list of your assets and debts, including separate property and property you acquired during the marriage
Your lawyer may also want copies of this information. Keep this information in a safe location away from the home.
Tracking expenses is always a critical component of managing your budget, but it is even more important during divorce. This information can also help your lawyer and the judge determine how to fairly split assets and debts and whether to award support. Write down every purchase and deposit you make. You can also use apps to help with this process. Use this information to create a budget. Also, track expenses that your spouse incurs and notify your lawyer of any violations of court orders pertaining to unauthorized purchases.
Make a Post-Divorce Budget
You have likely been planning based on two incomes and now have access to half the income and may have more expenses. It is important that you make a budget that reflects your life after divorce. This can help you determine if spousal support may be necessary or if you may have to make a difficult decision, such as selling the home.
Figure amounts you will need for regular expenses, like housing costs, utilities, insurance, childcare, medical needs, clothing and groceries. Add amounts for your children’s extracurricular activities, entertainment and retirement planning. Also, add anticipated costs, such as car repairs, vacation costs, your children’s tuition and upgrades to your home.
Increase Income and Decrease Expenses
Now that you know how much money you need to meet your expenses and maintain your lifestyle, you may have to make adjustments to your income and/or expenses. Take on extra shifts or freshen up your resume if you have been out of work. Go through your budget and make temporary cuts in some of the areas.
If you need extra help, contact an accountant, financial planner or divorce analyst for extra assistance. These professionals can help you narrow in on your needs and help you work with different budgets given different circumstances.