Going through a divorce is one of the most difficult things anyone will ever experience. Even if everyone involved agrees that it is the best decision, it can still be devastating emotionally and financially. While there is often a lot of assistance available to people to help them get through the complex emotions associated with a divorce, most people are left on their own to figure out how to get through the financial difficulties.
The following four tips can help you to ensure you are on sound financial footing after the divorce is finalized and your life begins to return to a more normal and predictable pattern.
Avoid Impulsive Decisions
One of the biggest mistakes people going through a divorce experience is making impulse decisions that will affect their finances. Due to the intense emotional turmoil you are experiencing, you are likely to make decisions that you will regret in the months and years down the road. When it comes to big money decisions like buying a home, a car, or anything else that has a significant price tag, it is best to put it off until you are at least a year beyond the divorce.
Stick to a 50/50 Split
Another common mistake that individuals make while getting a divorce is agreeing to something other than an even 50/50 split of assets just to get through the divorce. People will give up far more than they are required to just because they want this painful time in their life to be behind them. Sadly, all this actually does is extend the pain and add potential resentment down the road. It is well worth a little extra effort today to make sure you have a fair settlement that will leave you in a better financial position down the road.
Consider Tax Implications
Divorce and divorce settlements can have important impacts on your taxes, and these are things you should not overlook. Alimony, for example, may be tax deductible, so if you will be required to pay it, keep this in mind. If you are receiving alimony, you’ll have to consider that for taxes as well. Regardless of your income level, it is almost always a good idea to have a professional accountant help you with your taxes for at least the first year or two after a divorce.
Begin Your Post-Divorce Budgeting Now
It is never too early to begin making a budget for post-divorce living expenses. A written budget can be helpful when making any type of spending decision, and it can also help you to avoid making emotional choices that you may regret down the road. These budgets are also important because many of your expenses will be changing, and having everything written down is very helpful.
If you have any questions about how a divorce may impact your financial future, please don’t hesitate to contact me today!