Divorce can take its toll on your emotions, family, and money. Divorce means your finances are cut in half. Managing money after a divorce can be challenging, but it is not impossible. According to the Family Council, about 40% to 50% of marriages in the United States end in divorce. It is never easy. Money problems can compound the issues of divorce. Here are some tips for managing your money during and after a divorce.
1. Cut Your Budget
Until you can get your finances back in order, you may have to make some sacrifices. Getting your household bills down will relieve you of some of the financial worries. If you still use cable for entertainment, reduce your plan to the lowest tier. Find ways to conserve energy to reduce your energy costs. For example, according to the Department of Energy, investing in a new garage door that is energy efficient can save you around 25% of your energy bill. Cut out subscription services as well. Take a good hard look at where your money is going and see where you can stop the flow.
2. List Your Assets
You need to know where you stand financially. List all of your assets. Then consider which assets you can let go of to boost your bank accounts. Selling off assets can be challenging, but in the end, the money will come in handy during this financial uproar in your life. Keep in mind that while you are selling off assets, you will gain peace of mind. A cushion in the bank will come in handy while an asset like a piece of art will hang on the wall. Release what you can. You will be able to rebuild your assets in the future.
3. Accept Lifestyle Changes
As a married couple with two incomes, it was much easier to take vacations, have meals out, and enjoy other lifestyle perks. Accept that you will have to change your lifestyle for at least a little while. You may have to pack lunch from home instead of going out on office lunches. You may have to get your hair done less, buy fewer clothes, and make other adjustments. The lifestyle adjustment period after a divorce can be difficult but not impossible. Adjustments to your lifestyle will ensure you have the money you need to manage the basics and reboot your savings.
4. Cost of Kids
If you have a good lawyer, you can skip this tip. If some points went unaddressed in the child support and custody agreement, you would need to keep the channels of communication open. For example, about 25% to 50% of children will require orthodontic treatment. Who will cover that cost? Will the cost be split? You and your ex-spouse must continue communicating about the costs associated with the child. Children are not cheap, and their financial needs change and grow as they do. How will those additional needs be met? These conversations must be had.
5. Don’t Do This
Divorce can get your emotions swaying. Sometimes you will feel happy it is all over. Other times you will feel sad about the loss of the dream. Don’t make any large buying decisions until you are on the solid emotional ground you need to make big buying decisions. Many people decide to buy the car they always wanted after a divorce or take the once-in-a-lifetime trip they had planned. It’s a terrible idea to incur debt immediately following a divorce. Give yourself some time to heal and get a feel for your new financial standing.
Having a plan for your money after you divorce is necessary. If you follow these tips, you will put yourself in a better situation. Learn more tips for managing your finances after a divorce today.