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When you divorce, it’s likely one of the biggest challenges you face in your life. There are legal considerations during divorce, such as child custody and child support. There are things you have to think about, like where you’ll live following a divorce, and then you also have to think about how your financial situation might change.
Your financial situation after divorce can change for a variety of reasons.
For example, you may have a lot of legal fees to pay, or you could be paying a significant amount of your income in alimony or child support. You may have to transition to being a single-income home, whereas you were once used to two incomes.
If you’re facing financial challenges because of a divorce, how can you recover?
After a divorce, it can be tempting to want to bury your head in the sand and not think about how much your budget has changed. That may put you in a worse financial situation, ultimately.
You need to sit down and look at how the potential loss of an income is affecting you.
Create a new budget based on where you currently in your finances, rather than spending like you did when you were married.
Look at your income and your expenses post-divorce.
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Once you have looked at your income versus your expenses and you’ve gained a handle on the present situation, start setting small goals for yourself as a single person.
Smaller financial goals tend to be better because they’re easier to achieve and therefore they’re more motivating.
In the time following your divorce, until you know a little more about what your life and financial situation will look like as a single person, you might want to cut down your discretionary spending significantly.
After a divorce, you might be tempted to make impulsive decisions in different areas of your life, including your finances. You might want to buy or sell real estate to represent a new phase of your life, but be cautious about doing this.
For example, you might want to sell your marital home because of the emotional connection. However, you may end up losing money when all is said and done because of taxes and real estate fees.
Be cautious about buying a new home too. You may be anxious to put your name on something that’s just yours, but don’t do it when your judgment is still clouded by the emotions of your divorce.
After you divorce, to recover financially, you may also need to look at your benefits coverage and how it may have changed. First, do you still have health coverage or was that under your former spouse’s group plan?
Are there changes you could make to the policies that would save you money?
Have you considered disability coverage? Disability coverage can become particularly important when you’re divorced because if you are hurt or sick and can’t work, you won’t have a spouse’s income to rely on.
There are likely going to be gaps in your finances that you have to make up for following a divorce. You might also be working to chip away at certain debts, like legal fees. One way to make up for these changes is to cut your expenses, but you can also increase your income.
Maybe you find a second job or a side project to earn money.
As an added bonus, it may give you the chance to meet new people following your divorce.
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Following a divorce, people mourn the loss of not just the relationship but all the things that came with it. You have to let go of those feelings of being emotionally connected to perhaps a bigger house or more vacations. Accept that you’re in a new phase in your life, and that will come with both positives and negatives.
If you find that you’re having a hard time with the emotional connection you still feel to your marriage or the financial elements that came with it, you might want to talk to a counselor. They can help you see how your emotions can play a role in your financial situation.
The best thing you can do following a divorce as far as your finances is to be honest with yourself and proactive.
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