Although it is possible to take steps to protect your financial interests during the divorce process, almost everyone comes out of a divorce in a worse financial situation than when they entered it. Between the division of marital assets, the loss of a spouse’s income and benefits, post-divorce support obligations, and the cost of the divorce process itself, it is not uncommon for the recently divorced to face financial stress. However, many people are able to recover over time after taking stock of their new financial reality.
Common Financial Impacts of Divorce
Being well-informed about your finances during the divorce process helps you to make a plan for achieving your goals in the divorce resolution. After the divorce is finalized, though, you should regroup and take the time to consider all of the following ways that your finances may have changed, including:
- Reduction in income – If you and your spouse both work, the end of a marriage means that you will transition from a dual-income to a single-income household. If you were a stay-at-home spouse, you may find it particularly hard to adjust without your spouse’s income to support you. Additionally, the division of certain assets like investments and income properties can reduce each spouse’s earnings.
- Remaining debts – Marital debts are divided in a divorce along with assets, and for any debts that you are left with, you will need to make a plan to stay current on payments. Being granted full possession of the marital home can impose a significant debt burden if the mortgage has not been fully paid.
- Child support and spousal support – As a paying spouse, you will need to account for support obligations in your post-divorce budget. As a receiving spouse, you can factor support into your regular income, but you may need to keep in mind that support is temporary and start exploring other sources of income.
- Changes in tax filing status – If you and your spouse filed taxes jointly, you will need to adjust your status to single, or possibly head of household, which will likely impact the amount you owe and your approach to withholding.
- Effects on retirement savings – If your retirement savings were divided in the divorce, you may need to adjust your saving strategy to build back up to the amount you need to retire comfortably.
After reflecting on all of these changes, it is a good idea to create a budget and set achievable goals for yourself. Decreasing your spending, increasing your income, and making smart decisions in the short term can help you establish financial stability in the long run.
Contact a Wheaton, IL Divorce Lawyer
At Davi Law Group, we can help you understand the ways in which your divorce may affect your finances and reach a resolution that minimizes the negative impact. For a free consultation with one of our DuPage County family law attorneys, contact us today at 630-580-6373.