It may seem like a daunting task at first, as divorce can feel like an exhausting and emotional roller coaster. However, there are certain aspects you don't want to lose sight of like your impending finances. Analyzing your financial future after a divorce is necessary to build an independent future that you deserve and we want to help you by taking it one step at a time.
1. Start with your income. Take a look at all the sources of income that flow into the household monthly or annually. If possible look at your last two years of tax returns and take your individual income numbers. If you do not yet have individual income, leave the income entries blank until anticipated individual income amounts and/or sources are confirmed. Example: Salary, Tips, Alimony, Child Support, Bonuses, Dividends, Retirement, Pension, Social Security 2. Begin looking at your monthly or annual expenses. Looking forward to you and your ex-spouse will live in separate households. Each home will incur its own set of expenses. This includes - Household: rent, mortgage, real estate taxes; Transportation: car payment, car insurance; Children; Health/Medical, Gifts, Sports or Clubs, Subscriptions, etc 3. Prioritize your expenses. With that task completed, you may be ready to tackle other aspects of your divorce negotiation. If you discovered an income shortfall—now that two households require funding—it's time to dig deep. Evaluate each expense and trim or eliminate any that is not essential. Generally speaking, you do not want to spend down retirement savings for current income. There may not be time to replace such funds before you are ready to retire. 4. Draw up a budget and planned expenses moving forward. You’ll learn that there are patterns in how you spend your money, so set monthly goals for your spending that align with your financial goals. For example, your expense tracking may surprise you when you see how much you spend on take-out so create a plan to make a certain amount of meals at home. Keep your budget somewhere where you’ll see it: your smartphone or in your planner. 5. Revise as needed. Don’t get down on yourself if you can’t seem to meet your budget goals. You may have underestimated how much you spend on clothing or groceries and may need to make adjustments. The goal is to create a realistic budget that works for you, not punishes you. 6. Pay yourself first. Even if you can only afford a few dollars each week, work towards budgeting for savings, especially if you don’t have ready cash available for an emergency. 7. Know when and who you can ask questions to. No one is expected to be an expert at everything. To kick things off, double-check your work, or provide a new strategy, find a great Financial Planner to have as a point to contact.