For many couples, divorce inflicts a substantial blow to their cash flow and long-term security as each spouse adjusts to having half the amount of assets and monthly income. The need to revisit and rearrange expenses cannot be overstated, especially if a person is reentering the workforce after a long absence. Finances are a source of stress for many people, generally, but divorce tends to amplify this concern, as it is hard to know what having fewer resources looks like until the transition is underway. In addition, divorce itself creates new and unanticipated costs, with each spouse likely hiring a lawyer, and at least one needing to find a new place to live and perhaps purchase new furniture and other household goods, depending upon the division of property.

Consequently, many individuals in the middle or just on the other side of divorce can feel like the decision left them in a pit of financial instability that will be incredibly hard to surmount. However, finances post-divorce do not need to be so dire, and in fact, can offer some rarely considered benefits that could take the sting out of operating with less. A discussion of some ways to gain a firm control of finances both during and after the divorce is finalized, and some financial benefits divorcees may enjoy, will follow below.

Assessing the Financial Picture

There is no escaping the downward adjustment divorce brings to most couples, but the transition can be a little easier if the proper preparation is made, so that integration of adjustments and individual expectations can settle in slowly. To that end, the following are some tips and measures divorcing spouses can make to prepare themselves for the financial repercussions of divorce:

• Track spending and see where cuts can be made;
• Assess all financial products owned and determine if better deals are available, or if particular accounts are no longer needed;
• Create a budget based on a realistic assessment of income and expenses;
• Ensure that support and property divided in divorce is properly paid and transferred;
• Check retirement and insurance plans to determine continued eligibility and whether necessary changes must be made to policies; and
• Create a long-term financial plan that takes into account goals at the five, 10, and 20 year marks, which should make these adjustments less scary, generally, from a big picture perspective.

Benefits of Divorce

Thinking about finances during divorce leaves most people with a completely negative association. However, divorce also brings the opportunity to take advantage of benefits and freedom not previously available, specifically:

• The end of fights over money, and greater control over budgeting and expenditures;
• Early access to the retirement account funds without the assessment of the normal 10% early withdrawal penalty, if withdrawn pursuant to a qualified domestic relations order;
• The ability to take over retirement planning, which could produce better returns long-term, especially for women who tend to favor more conservative approaches to investing;
• Additional college financial aid;
• The ability to access spousal Social Security benefits at retirement, assuming the marriage lasted at least 10 years; and
• The opportunity to fine-tune and reset financial priorities, such as selling a large and expensive family home and moving to a place that does not require the same amount of upkeep.

Get Help

Divorce triggers a lot of changes, particularly to a person’s finances, which is the principal reason why getting the proper amount of support and division of property is so crucial to your financial stability. If you are considering divorce and have questions about the financial aspects of this decision, talk to Christopher L. Arrington, P.C. about your options. His years of experience handling all aspects of divorce will be used to get you the best possible result. Contact the Dansville law firm to schedule an appointment.