Divorce can be stressful on many levels and questions always linger: who gets what; where am I going to live; what about my retirement; what about our children; how am I going to pay my bills. Most people can be especially intimidated by the thought of managing money, oftentimes for the first time in their lives. Fortunately, under most circumstances and with the right help, you can become a relative expert in managing your personal finances in as little as an hour. Even with the most complex divorces, one of the biggest hurdles to overcome is the setting of a realistic budget.
We know it’s not sexy and it’s not fun to talk about but the budget is where it’s at. There are two types of expenses you will be faced with that you must plan and budget for: fixed expenses and variable expenses. Fixed expenses are, duh, fixed; they remain the same every month. Think of fixed expenses as the relative that wish you didn’t have but you know that you need, you know who I’m talking about (Aunt Debra). Fixed expenses are usually your mortgage or rent, car payment and car insurance, health insurance, child support, and spousal support. Here is an example of what one's fixed expenses might look like.
Rent or Mortgage and Taxes:
Total Fixed Expenses:
Total Automobile Expenses:
(This can be a fixed expense item or income, depending on if you are paying or receiving child support and/or spousal support.)
**This is just an example and the categories and amounts will differ depending on where you live and the lifestyle you choose.
Variable expenses are those expenses that fluctuate monthly. Think of variable expenses as your Sunday Funday friend, you might be able to live without her but what kind of life would that be? Variable expenses usually fall under categories like entertainment, utilities, vacation, and hobbies. Sadly, these are the expenses that get cut first when your budget doesn’t balance out.
No matter where you are in your divorce, meeting with an experienced divorce attorney can help you establish a budget and help you understand your financial responsibilities. Maybe the most important part about meeting with an experienced divorce attorney is the peace of mind you will have with one less stress taken off of your shoulders.
While the financial aspects of a divorce can range from the complex to the very simple, having a thorough understanding of how to plan and budget for your future will alleviate a great deal of anxiety. The attorneys at Smith Law Firm are committed to educating and helping our clients work through their financial concerns and plan for a better future.