Budgets are important no matter what life stage you are at. Any financial adviser, accountant or even your own mother will tell you that having an idea about what your expenses are and where your money is going is imperative to ensuring financial security.
When it comes to divorce, sitting down and figuring out how separating from your partner will affect your life financially is just as important. The reality is that very few people are better off financially after a divorce. It may not be an easy task, but taking a look at the following items will ensure that you are not stuck sitting at your kitchen table with a bunch of bills you can’t pay.
The first thing you need to do if you are contemplating divorce is to start tracking your spending as a family unit as well as your household income. How much do you and your partner bring into the house and how much of it is used to pay essential bills like water and electricity? How much do you spend on groceries? What are your mortgage payments? If you have kids, what expenses are you looking at when it comes to taking care of their needs? Having a good idea of your current finances will help you create a realistic budget for during and after the divorce.
More often then not divorce means establishing a new home which also comes at a cost. If there is a house involved, have an idea about who will remain in the house and how the secondary dwelling will be paid for. Do you have enough savings to purchase another property or will renting be your best bet? Take a look at the housing market in your area, see what’s out there and make a concrete plan based on your budget. Having an idea about what you can afford will narrow down the process and make it less stressful in the long run.
There will also inevitably been some fees related to the divorce itself. According to a survey done by Canadian Lawyer’s Magazine in 2011, an uncontested divorce can cost anywhere from $1,009 to $2,547 with the average being $1,353. A contested divorce will cost you much more, from $7,208 to $74,122 with the average being $12,875. This does not include a lawyer’s charges for emails and photocopying, disbursements for court fees or other add-ons like discoveries, appraisals, financial audits and mediation. Knowing your situation and how expected and unexpected charges will be paid is important for ensuring your financial stability during and after the divorce is finalized.
This article is just the jumping off point to the many things you need to consider before calling your lawyer. The more you are aware of your current financial situation the better prepared you will be if/when you decide to file for divorce. Contacting an accountant and arranging a meeting to review the above items is worth the time and effort. Financial planning is not always easy, especially when it comes to something as sensitive as the end of a partnership, however in this case knowledge is power. The more you plan the better you will be able to look after yourself and your children when the divorce is finalized.