Getting a divorce is not only an emotionally stressful process, but it is also financially stressful. After all, spouses will be economically independent again after their divorce.
One of the main purposes of a legal divorce is to ensure both spouses maintain economic stability after they end the marriage, but a divorce can still bring many financial changes to their lives.
Here are three tips to help individuals protect their finances and prepare them for a divorce.
1. Create a budget for the present and post-divorce
Divorcing spouses must fully understand their financial situation. Forbes reports this is one of the most important things to remember when divorcing. So, it helps if spouses gather financial documents and keep track of their expenses now.
For example, individuals should record their:
- Current income
- Savings and retirement accounts
- Everyday expenses, such as groceries
- Insurance payments
- Loan payments
Understanding this information now can help individuals create an effective budget they can follow to conserve finances. They should also consider their post-divorce situation after property division and craft a budget to meet their future needs as well.
2. Determine how equitable distribution will impact your finances
Connecticut is an equitable distribution state. Therefore, spouses will divide their marital assets equitably based on their financial situations – not equally.
It is important for individuals to consider the factors that Connecticut family courts consider when dividing property, such as:
- How long they were married;
- The financial contributions each spouse made to the marriage;
- Their current and future financial needs and abilities;
- The spouses’ shared and individual debt liabilities;
- Their current income and earning potential;
- If a spouse will have support obligations; and
- The property values of marital and separate property.
It can help spouses to review these details to learn how equitable distribution could impact their financial circumstances post-divorce.
3. Address finances in the parenting plan
In many cases, divorcing parents might also want to establish some rules regarding finances in their custody agreement and parenting plan.
Competition between parents is, unfortunately, common after a divorce. And that competition can often involve excessive spending on trinkets for children to try and “win” a child’s affections. This kind of competition can take a toll on both spouse’s wallets after a divorce. So, spouses should discuss their financial strategies proactively.