How To Create a Pre-Divorce Budget?
A divorce has the potential to be emotionally exhausting, to sap your physical and mental energy, and to drain your finances, but it does not have to be an uphill battle. Like any other foreseeable major life event, a divorce can be planned for ahead of time. One of the best ways to lessen the negative impacts is to create a pre-divorce budget.
What is the First Step in Making a Pre-Divorce Budget?
This beginning step can be seen as the ‘collection’ stage. When divorce is inevitable, take the time to collect all of your financial documents. Make sure that you have the right login information, or start making phone calls if you do not. You will want to have the following documents and information ready:
- Bank statements
- Credit card statements
- Income documents and paystubs
- Income tax returns
- Investment account statements
- Monthly bills
- Retirement account statements
- Other documents that show your expenses
Now that you have the documentation, review all of the information. You will need to know which accounts are individual or joint accounts, and the number of assets contained in each. Once you have all that together, put together a historical budget that tracks all of your expenditures for the past few years. This can establish your standard of living and can be done on a spreadsheet with monthly, quarterly, or yearly expenses.
Should I Consider Future Expenses?
This is another key element of a well-planned pre-divorce budget. By analyzing your past expenses, you can estimate what your cost of living will be after the divorce is finalized. Are you planning to move into a small apartment or a single-family home? If you get full custody of your children, how will you afford to care for them? These are just two questions that you will need to think about.
In addition to childcare and mortgage/rent payments, remember to think about past, present, and future expenses like car insurance, replacing appliances, and family vacations. Medical care is another vital component of your budget, as is travel time if you will be living far away from your shared children.
More Pre-Divorce Budget Tips
Neglecting to monitor your credit rating is a common yet major mistake that divorcing spouses make. Remember, your spouse’s poor spending habits could affect your credit standing and make obtaining a future loan quite difficult. Pay your bills on time for now, and separate your funds if you do not trust your spouse in this respect.
Do your best to avoid making large purchases or overspending on other things in the months preceding your divorce, because you will need to have enough funds to pay for things like alimony, child care expenses, attorney’s fees, and court fees. Besides that, if a court sees that you laid out a lot of money for a boat or something similar, they will assume that you have more disposable income. Also refrain from making big financial decisions until after the divorce, as changes to retirement accounts, will beneficiaries, and other important holdings will be determined during the legal proceedings.
The Marlton Divorce Attorneys at Goldstein & Mignogna, P.A. Help Separating Spouses Plan for Divorces
The experienced, compassionate Marlton divorce attorneys at Goldstein & Mignogna, P.A. understand the importance of planning for a divorce and offer confidential consultations to prepare you for the road ahead. Complete our online form or call our Marlton, New Jersey office at 856-890-9400 to get the process started. We help divorcing spouses throughout South Jersey in Marlton, Burlington County, Camden County, Gloucester County, and statewide.