Steps for Budgeting After Divorce
Rebuilding Financial Stability After the Divorce Process
When going through a divorce, you will find every aspect of your life significantly impacted. Divorce is emotionally draining, and can cause stress and anxiety, along with many other feelings stirred up by the end of a marriage. Additionally, it has a massive impact on a person’s finances. The dissolution of a marriage can means loss of income, division of assets, and a change in living arrangements. Both parties may be left financially vulnerable, so it is important to be proactive in rebuilding your financial stability. While this can be a long and arduous process, it all starts with a post-divorce budget.
Assessing Your New Financial Reality
The first step in taking control of your financial situation during a divorce is to go through all your financial documents. Credit card statements, loans, paperwork for joint assets, and an inventory of household goods that may end up being negotiated in court. Make a list of all sources of income and all expenses, to get a clear picture of your financial situation. In addition to your salary, list bonuses, investments, social security, retirement, and any other sources of income. You don’t have to be completely specific regarding all your expenses, but include things like rent or mortgage, insurance, vehicle loans, credit cards, utilities, food, and other monthly expenses. Once you understand your financial standing, including how much money is coming in and going out, you will have a firmer footing, allowing you to move forward.
Setting Financial Goals for a Budget After Divorce
When determining your budget after the divorce, make sure you are thinking about your net income, rather than your gross income. Remember that taxes, payroll deductions, and social security will all come out of your paycheck up front, and the money you will have to work with will be what is left. Write down all your essential expenses, including housing, child support or alimony, insurance, groceries, utilities, and transportation. Identify the essential expenses, and subtract those from your net income before you begin considering non-essentials. With your essential life expenses, work on building an emergency savings fund and planning for your future. This may seem unrealistic, but it is important to think about unexpected expenses and planning for life moving forward.
How to Budget After Divorce with Practicality in Mind
Once you have calculated the amount of money you will need for your living expenses, it’s time to add in the non-essentials. This includes entertainment, dining out, and other niceties that aren’t necessary. Understanding both essential and discretionary expenses allows you to strategize for things that are important to you. Consider using budgeting software to help you stay on your budget, and review it periodically to make sure you are on the right track.
Adjusting to Single Income Living
If you have been accustomed to being part of a two income family, making the shift to a single income can be challenging. This is why it is important to have an experienced divorce attorney on your side during divorce proceedings, to make sure the settlement is fair and equitable. If you are the spouse paying alimony or child support, the goal should be to provide support without stripping you of the means to make ends meet. If you receive alimony or child support through your settlement, it should be enough to help you support yourself. In either case, it may be necessary to pick up a side job, like freelance work, to boost your monthly income.
Revisiting Legal and Financial Paperwork
A divorce settlement is intended to be final, but there are some cases in which it can be revised. If either party presented fraudulent information to the court, or if the income or expenses of either party changes, there is a possibility that the judgement will be set aside and revised. However, courts typically take a limited approach to adjustments, having to do with income fluctuations. A person losing his or her job is unlikely to have reduced spousal support, and an investment that increases or decreases in value probably won’t be a significant factor in revisiting the settlement. There are some cases in which there is an unforeseeable change, like an unexpected inheritance or a significant drop in the value of an asset.
Resources for Financial Recovery Post Divorce
As with every aspect of a divorce, you do not have to go alone. With the help of a family law attorney, you can successfully navigate this sometimes harrowing process, to achieve a fair settlement and have a reasonable handle on your finances as you move forward. Consider reaching out to a financial professional, too, if you are struggling. A trained accountant can help you make sense of your finances and build a better budget.
Consult the Experts in Divorce Law for Help with Every Aspect of Your Divorce
Since 1981, the Law Office of Kent L. Greenberg has been successfully assisting clients in the Baltimore County area. Our seasoned professionals work hard to resolve our clients’ legal issues, comprehensively evaluating each case to determine the best strategies for handling each unique situation. Each divorce and family law issue are unique, and there is no one solution to meet every need. Having effectively handled numerous cases in our decades of experience, our firm understands the laws and protocols specific to Maryland, and will put our knowledge and expertise to work for you. When you have a domestic legal issue, you can trust the Law Office of Kent L. Greenberg to work to achieve the best possible decision in line with your best interests. If you are looking for legal services in Carroll County, Pikesville, Owings Mills, or Baltimore County, Maryland, contact us through our website to schedule a consultation.