By Andrew Hatherley on Feb 24, 2023
If you think that you’re getting a divorce, it’s very important to start planning. Plan to protect yourself while ensuring you remain in a strong financial position. Be prepared for these 6 things
with your divorce finances.
Money for Day to Day Expenses
This may not be the most important of the things to consider with divorce financial planning, but it will have the biggest impact on your daily life. You’ll need cash flow to make sure that you’re able to function during and after the divorce. Your cash flow will pay for things like your recurring bills and any one-off (but expected) expenses (car maintenance, yearly memberships, or wardrobe purchases).
Insurance for Yourself
It’s important that you find a good post-divorce health insurance option so that you’ll be protected in the event that anything happens. While you’re exploring health insurance options, now is a good time to also look at things like auto insurance, life insurance, and homeowner’s (or renter’s) insurance.
Ongoing Support for (or from) Spouse
Depending on your situation, you may be required to pay support, or you may receive support. If you are the party paying support, you will need to work that into your plan. It’s one of the things to consider with divorce financial planning even if your support automatically comes out of your compensation from employment. Know how much spousal support you’ll be paying and then adjust your budget to work without that money.
If you’re going to be receiving spousal support, know that it is there to help. You should have a budget in place. Consider putting some of the funds into savings, if you can, or replenishing your retirement plans.
While your estate changes won’t directly impact your money situation during your divorce, you still need to make sure that they’re a part of your divorce financial plan. Consider changes to beneficiaries and any other updates that you need to make after your divorce. Keep in mind that some of these things may be dictated by your court order so check it or with your attorney first!
The way that your retirement is handled will likely change after your divorce. In some cases, you might need to pay a portion to your ex and in others, you might want to make changes to your retirement plan. Be sure that you include all of these in your financial plan.
Focusing on Taxes
Your tax filing status is going to change as a result of your divorce. Know that this is one of the things to consider with divorce financial planning and talk to your accountant as soon as possible. By being prepared for changes to your filing status you’ll be able to make the best decisions regarding your financial situation at tax time!