One of the biggest reasons that make getting a divorce so unpleasant is figuring out your finances. As horrifying as gathering all financial data may sound, many people have actually found the process of collecting and weighing financial information to be highly beneficial. While collecting financial records is certainly time consuming, and possibly depressing, it is a required part of the financial planning process.
By reviewing where your money is really going, you will gain more knowledge about your actual monthly spending habits and expenses, both necessary and unnecessary. The experience will be an “eye-opener,” especially for those individuals who have not been primarily responsible for managing family’s finances. Even spouses who routinely have handled family finances are likely to finish the process with a far greater understanding of their true financial picture. Among other things, this experience may cause you to rethink spending decisions and other lifestyle priorities. You now may want to change your spending habits and investments, as certain choices may be a better fit for your financial future and goals than others.
Here is an example of making financial choices: if your house needs new windows, you can deal with that in a number of ways, all impacting your finances.
A) You could use your savings to replace all windows. Your house will be less drafty, thus saving you money long term in heating and cooling costs, but you will no longer have savings.
B) You could buy new windows using a loan or credit card, thus preserving your savings for emergencies. But this option means you will have a new monthly payment, and depending on how long you take to pay off the credit, the real cost of your windows will increase to include the finance charges.
C) You could replace only some of the windows, preserving some savings and avoiding debt, but your house will still have some bad windows.
D) You also could spend all your savings on lottery tickets hoping to win the big jackpot that would allow you not just to buy new windows, but a nicer and bigger house! Though, if you don’t win, you will now have no savings and you still need new windows.
For the person who never had a financial plan, divorce provides an opportunity to finally create one. For the person who has had a financial plan in place, but that plan depended on a breadwinner spouse and/or all the assets accumulated jointly during the marriage, that plan will have to be modified to fit the post-divorce needs.
Remember that the financial decisions you now make, may affect the rest of your life. So don’t just rely on financial and legal advice from friends, relatives, or others who may mean well, but may not have an accurate understanding of the process, the options, or the interrelated nature of some of the financial choices to be made. Also, sometimes it’s hard to separate financial planning from the emotions that often accompany a family law proceeding. That is why it is best not to make any rash decisions, and to consult a competent and trustworthy professional to help you figure out what needs to happen so that you have a secure financial future post divorce.