Divorce is a life-changing experience that many people find emotionally traumatizing. Divorce can also leave your financial health devastated. The longer a couple is married, the more entangled their finances become.
How Will My Finances Change Once I’m Divorced?
Separating after years of joint financial support can be difficult for many couples who have grown accustomed to sharing expenses with another person. For example, if you and your spouse both work and equally contribute to your monthly bills, getting divorced will mean your housing and utility costs are now your sole responsibility.
Five Expenses to Watch for Post-Divorce
You could be forced to economize or find roommates. However, when a newly divorced individual continues to spend money as if their expenses are still shared, they could quickly find themselves in financial hot water. There are many ways a divorce can be harmful to your financial health; here are several financial pitfalls to avoid when you’re newly divorced:
- Not Preparing for a Decrease in Your Monthly Income: Once you’re single, you no longer have access to a second income. If your partner worked, you are now your sole source of financial support. During your divorce negotiations, you will have received a share of the debts and assets. You will be responsible for paying for everything on your own, and if you have children, a percentage of their needs, like daycare or insurance. You will need to make all these obligations work with your salary alone. Returning to a single income can shock many divorcees who’ve been married for a long time. Putting together a budget could be beneficial.
- Increased Childcare Costs: When you were married, you and your spouse shared childcare expenses and obligations to make work possible. You will now need to pay those expenses and secure additional childcare for any additional time you need someone to watch your kids while they’re in your custody. For example, if you worked nights because your spouse was home watching your children during the day, you may need to change your hours or consider if you have afforded the costs of after-hours childcare if you share custody during working hours.
- Increased Housing Costs: Living single is more expensive; it’s basic math. Living with an employed spouse means double the income to split the costs of significant expenses like rent or a mortgage. You and your ex shared housing costs and utilities, which means once you’re divorced, those bills will essentially be doubled. You can find cheaper accommodations, but living as you previously enjoyed could be difficult without a roommate. If you owned a home while married and were paying down a mortgage, it can be tough to determine whether either of you can afford to keep your home. Can one person shoulder the financial responsibilities of a mortgage and utilities alone? These important questions must be answered to protect your post-divorce financial health.
- Higher Health Insurance Costs: Health insurance is typically carried through one’s job. Once you’re divorced, if you were carried on your spouse’s policy, you will need to secure insurance on your own. If you’re employed, this will be a simple fix, but that doesn’t mean it will be affordable. You receive a discounted insurance rate when you’re part of a family insurance plan. Plus, you and your ex share insurance costs if you have children. These new expenses can be easy to overlook when you’re newly divorced, so make sure you’ve added these new expenses to your budget.
- Decreases in Your Retirement Accounts: When you were married, your retirement finances were a joint goal you and your spouse worked to meet. If you were both contributing to retirement accounts, and planning for a future where you’d have two pools of income, that’s no longer the situation. You may find that without your spouse’s retirement support, you will need to increase your contributions to get back on track with your savings goals. If you were the only party contributing to a retirement account during your marriage, your ex may have been awarded a share of your retirement contributions. You may need to contact a financial advisor to request an assessment. A financial advisor can show you how your divorce impacted your retirement plans and provide a new strategy moving forward.
Ask the Attorneys at Family Law San Diego for Help
Getting divorced is brutal and can take an emotional and financial toll. It’s vital to your financial health to prioritize getting ahead of any potentially damaging budgeting issues, especially before they can become serious. By planning, you will have time to budget and seek help from your friends and family where possible. The most important thing you can do to protect your financial health post-divorce is to be aware of the changes and plan accordingly. If you’re planning to file for divorce, our attorneys can help. Call (619) 577-4900 to schedule a consultation. If you are worried about your post-divorce finances, let our attorneys know so we can get started helping you prepare for what’s to come.