Money can be one of the biggest concerns in any divorce. Regardless of how long the marriage is, couples often combine their assets during their marriage, and dividing these marital assets in a divorce can be both a challenge and a significant point of stress.
One of the largest stressors in any divorce is determining how to financially transition from one household to two separate, independent households. Instead of just one mortgage or rent payment and one set of associated bills, divorcing couples now have to face the reality that physical separation requires double the funding. This can be an overwhelming reality to face in the midst of the emotions associated with the transition. Therefore, it is important to have a plan and be realistic with your expectations for finances during the divorce process.
1. The Reality of Your Expenditures
One of the first steps in the divorce process is for each party to list the reasonable living and personal expenses they will have on their own. A client will list these expenses in what is called a financial affidavit. This affidavit includes all expenses a party may accrue while living on their own after separation.
It is crucial for clients who are filling out their financial affidavit to be both realistic and comprehensive. A financial affidavit requires a client to determine how much they spend on things such as over the counter medication and eating out. Many clients tend to underestimate the amount they spend on these categories each month. However, almost every person buys Tylenol at least once a year or has a monthly budget for eating out. It is important to include these amounts accurately so you are financially equipped for this new lifestyle.
When filling out your financial affidavit, it is helpful to look back at previous bank statements and reflect on what you truly spend for each category. The process may seem tedious but it is important to capture the expenses you will have now that the items bought for one household will be divided between two.
2. In the Meantime; Paying for Two Lifestyles
Typically, upon the decision to separate one party moves out of the marital residence into a separate residence. Whether this separate location be an apartment or a house, this relocation comes with its own expenses. Oftentimes, clients who leave the marital residence are still contributing to the payments associated with the marital residence while also paying for their new place. Trying to manage keeping two households afloat financially can be overwhelming to say the least. Therefore, it is important for clients to accurately determine how much they are spending to fund each household and how much they will need to maintain their own residence once they are separated.
Both parties need to be realistic and determine whether they can financially maintain the lifestyle they once lived as a married couple.
3. Hidden Costs Associated with Dividing Expenses: The Cost of Individual Health Insurance Coverage
When filling out your financial affidavit and evaluating the expenses you will have once divorced it is important to think through expenses that once were bundled in to a family plan. Many couples have heath insurance for the family established by one of the parties’ employer. Although this coverage is often maintained through date of divorce, once the divorce is finalized the party that was once covered now has the expense of private insurance. Therefore, it is important to contact these providers before the divorce is finalized to determine the expected cost and plan for it ahead of time.