So you’ve found yourself confronting the end of your marriage. With the swirling emotions, confusing choices, and trying to help your kids cope, you’ve been focused on getting through one day at a time and looking forward to moving on with your new life. Sometimes during this stage, we’re so consumed with the short-term that we forget to plan for the long term! Take a step back and take the time to analyze your finances as well. You need to know how you’re going to pay the bills! The first step to knowing how much money it will take, is to know how much it’s going to cost.
Do you have a budget? No, I mean a REAL, detailed budget that includes taxes and inflation projections? No? Well join the club. If you don’t have a firm grasp on what your projected spending is going to be, how will you ever begin to know if the divorce settlement will cover your needs? The first step to ensuring your financial dignity is to do a budget. Some people find it helpful to just track spending for one or two months. I’m a big fan of free budget software like SeeFinance for Macs or Mint.com for PCs. Kudos to Bank of America for recently adding budgeting tools to their online banking platform free for their customers. Check your own online banking provider to see if they have a free option. Once you have your basic monthly spending categorized and captured, then you have to project forward to your new single life and predict expenses that you may not have now.
Were you getting health insurance through your spouse’s employer? You’ll be able to stay on that plan for 36 months using COBRA, but you’ll have to pay for that yourself. Are you going to need to go back to school to get some more training or education? Will your children have needs as they get older and are involved in more activities? Where will you live? Will there be maintenance costs? How much longer will your current car last?
Once you have a budget in place, you can determine your true needs. Now when you prepare your Financial Affidavit for your attorney you will be able to provide more accurate numbers. The attorney won’t question the numbers you provide unless they are glaringly wrong. A Certified Divorce Financial Analyst (CDFA) can assist in this process to make sure that not only your numbers are accurate but that your spouse’s are as well. The CDFA can then run spreadsheets and projections of your cash flow and net worth for the next 10, -20, even -30 years to be SURE the settlement you are agreeing to will work for you both down the road. Don’t make the mistake of “thinking” that the settlement will work. You only get one chance to structure the divorce settlement and you can’t afford to make any mistakes! Take your time and hire the right professionals. Contact our team to learn more about a smarter divorce solution.
