Following divorce, the financial situation of each person will likely change. This is because once marital property is divided, each person may move into a new home, and one spouse may be ordered to pay child support and/or spousal maintenance (alimony). That said, there are certain steps one can take to financially prepare for divorce in order to become financially independent.
The first step is to make a budget. A budget will shed light on if there is enough income to cover expenses and if expenses should be reduced or eliminated. For example, a person going through a divorce might decide to cancel a magazine subscription or stop buying $4 lattes at the coffee shop.
To make a budget, start by listing fixed expenses ˗ rent or mortgage payment, utilities, phone, cable TV, health insurance, etc. Then list variable expenses ˗ entertainment, clothing, eating outing, etc. Then list income sources ˗ employment, pensions, and investments. Lastly, compare expenses and income to see if there is enough income to cover expenses.
If there is not enough income to cover expenses, individuals should attempt to eliminate or reduce variable expenses ˗ shopping, eating out, entertainment. Simply put, stop overspending.
After reducing or eliminating variable expenses, people still may find themselves short on funds. These individuals must get creative with fixed expenses and see if anything can be cut. For example, can the cable television or cell phone services be eliminated?
If money is still tight, individuals should try to increase income. This might include part-time employment or finding a roommate.
These steps can help divorcing couples reach financial balance. Financial balance is needed because financial situation of divorcing couples will likely change during and after divorce. This is especially true after property is divided, child support or spousal maintenance is determined, and new households are created.
Minneapolis Divorce Lawyers
At Clausen & Hassan, our Minneapolis divorce lawyers have experience with Minnesota divorce law and many details of the divorce process. If you have questions, contact us today for your free consultation about your specific situation.