If you have been looking down the barrel of the end of your marriage, you might be considering divorce. It’s one of the biggest money spinners every single year and it can really have a negative effect on the finances of those who file and who are in the middle of it. Divorce is a drain emotionally, but it’s also financially a drain and you need to know what to do to make sure you’re aware of how divorce is really going to affect you.
Sometimes, divorce can impact you in ways you don’t even anticipate it will, and that can be difficult to comprehend if you’re in the middle of a legal battle - the stress can cloud your judgement. You might think that you know everything there is to know but you’re going to have questions. Is a limited company protected in divorce? Is your trust fund protected? There are things you need to know, and these are the ways that divorce can affect your finances:
- Your health insurance. It depends on whose plan you were under when you got married in the first place, but you might have to pick up the bill for health insurance afterwards. If you haven’t had this expense before, you have to make room for it because you definitely have this expense now. You don’t need to get divorced and lose your health insurance in one fell swoop, so make sure that you’re aware of the costs you have to pay after you divorce.
- Childcare costs. Do you pay childcare costs right now? You’re going to have to balance your usual budget as well as paying childcare costs when it’s your time with the kids. It can mean fewer opportunities for the kids but you can split these new costs with your ex if they’re extra curricular.
- Your credit score. If you have to refinance your mortgage or you have to pay out for another one, your credit score could be toast. It’s important to know which party will be responsible for paying each bill, and you should be aware of how your credit will be affected. A chat with your bank will help! You might not be able to avoid the impact on your credit, so just be aware of it!
- Your debt. Did you share credit cards? Bank accounts? You need to make sure that you are both splitting the debt between you so that it gets paid off quickly. Have this done through mediation so that you know who is paying what and when, and it’s settled with as little animosity as possible.
Your finances are going to take a hit if you pay alimony, for the kids, for a second house. You might not consider any of this when you are married, and nor should you. It’s okay to have hope that it will actually last a lifetime. However, if you do end up going down the route of divorce, you should think about how you can sort your finances.