When you are in the divorce process there is a lot of unknowns. Your financial planner will look at multiple scenarios and show you what to expect with your budget if “what ifs” were to occur, such as a medical emergency or a debilitating illness; which has a constant drain on your budget, and other types of financial hardships.
Short Term Goals
Short term goals are focused on financials that are being paid currently with the joint account. Not everything has been completely divided up at this time. Neither child nor spousal support has been determined and bills still need to get paid. Do your best to avoid putting day to day expenses on credit cards. Maxed out credit cards bring their own issues if not paid down or missed payments occur.
Your attorneys will eventually come to an agreement regarding the expenses, but there is a period where everything is in flux and both parties need to make sure finances are being covered and nothing is falling through the cracks. And do not forget about the attorney fees, they will be adding up as well during this time.
While it is not recommended, if funds are required to help cover expenses, you can pull from your retirement. This must be a retirement plan that is specifically in your name, not joint. If you are under the age of 59 ½ you will be subjected to pay a 10% penalty and income tax based on your income tax bracket. Over 59 ½, there is no penalty for accessing your retirement funds, but you are still required to pay income tax if it is a pre-taxed retirement plan.
Long Term Goals
Setting long term goals during a divorce is often a tough endeavor. For a greater chance of success, you need to be realistic with your expectations and have an estimation of what your long-term financial goals will look like. There could be added medical expense for a pre-existing health issue that requires medication. If your health insurance was covered under your spouse’s insurance, you will be responsible for coverage. Long-term goals may also include going back to school to further your education to increase salary and income. Or, if you are currently not working, now is the time to get back into the workforce.
When you sit down for the settlement offers, you need to ensure that any new expenses are added in to your new budget. If the support is not adequate, you will either need to see if there is more support available or find another source of income to supplement the needed finances. Remember, support is not permanent, eventually, it will end.
During the divorce settlement, the only thing that attorneys look at are the current assets, debts and how they will be addressed and eventually divided. You are paying your attorneys to give you sound legal advice. Your financial advisor helps you prepare and plan for your financial future.