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Put post-divorce finances in a crystal ball

Monday, July 16, 2018

A divorce in Texas and throughout the country present uncertainties on issues such as property division and child custody. These insecurities do not end with the divorce decree as research shows that almost three-quarters of America's 25 million divorcees are concerned over financial instability.

Separate household costs, counseling for the children, the taxes and expenses associated with selling the couple's assets and legal fees and costs may be costly. Planning can help mitigate the impact of these expenses and provide some post-divorce financial stability.

First, a spouse should assess their assets and debts and their post-divorce living expenses. Selling the family home and downsizing may be required.

Additionally, budgets need revised. Along with the added costs of running separate households, divorce may lower a spouse's income. Previous luxuries may have to be dropped.

Family-related expenses, especially those concerned with the children, may also need reduced. Options could include moving to a house that costs less, purchasing a more inexpensive vehicle or reducing vacations. A parent may need to prepare their children for a less-affluent lifestyle and a lower standard of living to assure that educational, health and other essential financial needs are met.

Salaries and wages also become more important. Retirement plans may have to be delayed. Investments in further education and training should be considered depending on the spouse's age, education and employment history.

Savings also become more important even though almost half of all divorced spouses make no investments or save money. An automated savings and paycheck withdrawal plan assures that savings does not get loss among the additional expenses and worries following divorce.

An accountant or financial planner can help provide options on these financial challenges. An attorney may also assist spouses during divorce to assure that financial needs are met with fair and reasonable property division, child support and alimony and an enforceable divorce decree.

Source: Wise Bread, "How to build financial stability after divorce," Toni Husbands, Feb. 20, 2017

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