Many things can impact your financial stability after the end of a marriage. If you are still considering taking the step of legally ending it through a divorce, shore up your finances so that you can be on the best footing possible as you move toward living on a single income.
Throughout your marriage, you might have lived off of two incomes. This makes it easier to afford bills like the mortgage and car payments. You will notice that your bills might not go down much when you move toward a one-income household so budgeting the money you have coming in is imperative.
Sharp reduction in income and assets
According to a study done by the Government Accountability Office, women will have a 41 percent reduction in income and a 41 percent reduction in assets when they go through a divorce. A man will experience a 39 percent reduction in assets and a 23 percent reduction in income when a marriage ends.
Assign every dollar
Create a budget now so you know where your money is going to go. If you are moving out of the marital home and don’t know exactly what your rent and utility payments will be, estimate these based off of what’s common in your area. It is always best to estimate high and have money left over than it is to use a figure that is too low and be left scrambling for money.
Don’t forget that you have to budget for some divorce-related expenses, such as legal representation and filing fees. These can make a big difference in your budget until the marriage is over, so plan accordingly.
Think about the future
As you plan your finances, remember that the decisions you make now can impact your future. You might think that a shopping trip is helping you to feel better, but you may struggle with the bills in the future if you are putting your purchases on a credit card.
You also need to consider the impacts of your property division settlement. Look at how specific assets might impact your budget. For example, keeping the vacation home can seem like a good idea but you must evaluate the cost. Can you afford the mortgage payments, homeowner’s or condo association fees, the upkeep, insurance, taxes, and any other expenses related to keeping the home?
The end of your marriage is a good time to improve your finances. It will take work, but making good choices about your money now can help you down the road.