The reality of budgeting for your newly divorced lifestyle is that the same amount of income that used to maintain one household must now be stretched to support two households. In most instances, money becomes tight during the divorce process. As a result, there is rarely enough money to meet both parties’ needs. In that the divorce process can last for months and, in some instances, even years, a firm handle on your personal finances is not only helpful, but necessary. The starting point is the preparation of a realistic budget for newly divorced lifestyles. You must keep in mind that you may not be able to afford everything you enjoyed while living together as a married couple. After it is determined how much income is available to you, your initial budget may need to be adjusted. The income you have available may come from several sources.
If you are employed, you will have your earnings, which become your separate property as of your date of separation. If you are an obligee, you will also receive support, either child support, spousal support, or both. In some situations, a party may also receive financial assistance from friends and family members, either in the form of gifts, or loans. Regardless of the sources of your income, it is important to calculate a realistic estimate of what your monthly income will be.
Likewise, if you are the obligor, your budget must include your support payment. It is important support payments be made in a timely fashion in order to avoid accruing arrears. Once arrears begin to accrue, it can be difficult to pay them off. Failure to pay arrears may have significant negative repercussions, such as denial of a driver’s license, suspension of professional licenses and seizure of assets and income, such as income tax refunds. As mentioned above, you will want to examine your budget in light of your income estimate.
If you have sufficient income to meet your expenses, no modifications to your budget will be necessary. However, if there is insufficient income available, you will need to trim your budget. A divorce proceeding is a high-stress situation. Financial strain is also extremely stressful. When the two are combined, such as is often the case in a divorce, stress levels are exacerbated. As studies have shown, stress has negative physical and emotional repercussions. Therefore, it is extremely important that you have your finances in order, to the best of your ability, when you begin the divorce process. Ideally, you will analyze your financial situation prior to actually initiating the divorce process so as to be even more prepared once the litigation begins. Your ability to successfully manage your financial situation during the pendency of the divorce will provide you with a greater sense of security and independence as you move forward. If you have additional questions about how to budget during or after your divorce, please consult your financial advisor, or contact our office for support from our experienced California divorce attorneys.