When you are approaching a divorce, or in the middle of one, there are a lot of important considerations to be mindful of. It can weigh on a person. Even when divorce means a new beginning, a fresh start, there are things that you will still need to manage in order to help ensure your future remains as bright and full of potential as possible. One such consideration is your financial well-being, both now and in the future. Unfortunately, many people make tragic financial mistakes during divorce and they end up paying a great price as a result. Here, we will review some of the most common financial mistakes people make during divorce in the hopes that you will work to avoid falling victim to them.
The Most Common Financial Mistakes People Make During Divorce
To start, let us discuss one of the biggest and most common financial mistakes going into a divorce. Not knowing about your finances can have a far-reaching impact on the outcome of your divorce and post-divorce life. It is a big mistake and one that can be easily avoided. Most commonly, the people that make this mistake are the ones who may have deferred to their spouse on financial matters during the marriage. The other spouse may have unilaterally handled all financial matters and made necessary financial decisions. Whatever the reason you may not be totally familiar with your financial situation or that of your spouse, now is the time to learn as much about it as possible. Make copies of key financial records such as account statements.
Another common financial mistake people make during a divorce is failing to consider the possibility of mediation. Mediation can be a big money saver. Furthermore, it can give you and your spouse much more control over the divorce process and outcome. Note that mediation is absolutely not right for every couple. This can be especially true if your spouse seems less than forthcoming about disclosing financial information or may be hiding assets. Mediation, however, can be a great time-saving and money-saving option for the right set of spouses. In mediation, you and your spouse work with a neutral third party, the mediator, who works to facilitate reaching an agreement on the key aspects of divorce such as property division and alimony, among other things.
Another common mistake is failing to make a budget or failing to make a concerted effort to make as much of an accurate budget as is possible. Life after divorce is generally more expensive. Going from a two-person household, with possibly two incomes, to a one-person income on a single income can be jarring. As you go through your divorce, establish a budget that accounts for your current income sources and those you are likely to have after divorce. Budget all of your expenses. You may even wish to retain a financial professional to help you with this. You will need to account for inflation. You will need to account for changes in circumstances such as, if you are set to receive alimony, planning for the time when those payments are set to stop. If you are planning to receive job training or further education to increase your earning potential, budget for the lag in income and the increased expenses you may incur during that time.
Family Law Attorney
The decisions that are made during divorce can have such a profound impact on your future. This impact can be felt for years and years to come. You can trust the experienced team at Cohen Family Law to be by your side, providing you with legal counsel you can count on, and protecting your best interests at every step. Contact us today.