Heading into a divorce without a solid plan and understanding of the process can be a recipe for disaster. After all, a divorce means that there will be significant changes in your life — not least of all to your financial situation.
Fortunately, with a little bit of foresight and with help from a family lawyer, you can navigate through some of these common financial mistakes that people make while getting a divorce.
Fighting a long legal battle
Hollywood can make divorce seem like a long and ferocious courtroom battle. Digging in your heels on every single issue for the sake of “winning” the divorce, however, this can quickly lead to large legal bills. Taking an approach such as collaborative divorce or mediation can help you come to a mutually beneficial compromise with your spouse without breaking the bank.
Not anticipating or understanding the potential terms of the settlement
Optimism is a good thing — but expecting an overly favourable settlement might set you up for a big disappointment. Alternatively, it is possible to misinterpret the terms of the settlement and think that you’re going to get a bigger piece of the pie than you actually deserve. It is important to ensure that your expectations are appropriate.
Failing to Budget
There will be a lot of differences in your financial outlook after a divorce. Both your expected income and expenses will have changed significantly — and failing to account for that can lead to some serious financial troubles. It doesn’t work to simply carry on with your established spending habits; sit down and work out a new budget to see what changes you need to make.
Overspending can quickly cause problems, whether you’re treating yourself to remedy the stress or if you’re going the extra mile to compensate with your kids, spending lavishly on a new partner, or yourself. Again, the key is to be aware of your new financial situation and not stretch it to the max.
Not understanding debts
In a divorce, you share in the equity but debt factors into the equation. It is important to understand which debts you will still be responsible and how your spouse’s debts impact what you will be left with.
Not asking for help
There’s lots of help available — you just need to reach out for it. From financial advisors to family lawyers, you can take advantage of expert advice from professionals who have been through the process before and can give you valuable insight for the best course of action to take.
If you’re looking for any answers to your specific situation, get in touch with Epstein & Associates and we’ll make sure to arm you with as much information as we can!