Amidst the emotional and life-altering turmoil of legal separation, navigating financial to-dos may be the last thing on your mind. Despite the many complex challenges you are likely facing during this time, the choices you make during the legal separation process can define your financial foundation as you make the transition into a new chapter.
Our divorce mediation attorney in Hauppauge, NY recommends these proactive steps to help you achieve post-separation financial stability and security. Take a few moments to explore this helpful guide and integrate these practical strategies into your financial to-do list.
Evaluate Your Financial Standing
The best financial plans begin with a transparent understanding of your financial position. Start by gathering financial documents and creating a personal balance sheet that outlines current income, bank statements, debts, and any other pertinent assets. By organizing a clearly defined income, expense, and total asset overview, navigating the next steps and organizing a reasonable financial plan becomes significantly easier.
It’s important to note that depending on the outcome of the legal separation, your income/expenses/awarded assets can vary significantly. For instance, some individuals may be entitled to spousal support and other ongoing payments for child support, etc. Alternatively, you may be required to pay additional expenses if you are the primary income earner, your spouse cannot work, etc.
Organize a New Budget Based on Potential & Known Changes
The details matter when organizing a new budget for your new life. When creating your document, be sure to account for all potential variables, such as a new car payment, health insurance costs, and adjusted housing expenses if you need to find a new place to live. Modern expense and planning apps, such as Simplifi, Tiller, and You Need a Budget, can further simplify the process.
When organizing your new budget, leave room for flexibility if the details of the legal separation still need to be finalized. For example, if their employer’s health insurance will still cover you after the separation is finalized, you may not need to adjust your monthly healthcare budget. Alternatively, create a contingency plan that covers “worst case scenario” changes, such as the need to find a new insurance plan or purchase a new car, and factor these potential costs into “Budget B” if the legal separation could result in potential added costs.
Prepare for Employment Changes & Retirement Savings
Legal separation and divorce often lead to a changing work life and how retirement savings are accrued. For many, separation goes hand-in-hand with job hunting, transitioning to full-time work, and/or refreshing career skills. On the other hand, the opposite may be true; many individuals who previously worked full-time may need to transition to a slimmer work schedule if they will be assuming newfound childcare and home life responsibilities.
Whatever the potential changes, start applying for new jobs or begin making arrangements for your reduced work schedule as soon as possible. Depending on the legal separation timeline and what you may (or may not) receive in spousal support, it’s imperative that you get a headstart when planning for financial success.
The same potential for significant change applies to your monthly retirement planning. You may need to change savings accounts, reallocate certain assets, and create a new retirement planning budget based on your expected income, expenses, and debts. To support you through this process, we highly recommend working with a licensed financial planner or utilizing a trusted retirement planning company and/or app to establish a strategic plan of action.
Partner With Our Mediation Experts
Our unbiased mediation guides the way to mutually beneficial separation plans. Our knowledgeable team serves as a third-party advisor, helping you and your spouse draft/submit a fair and amicable agreement that works best for everyone. To learn more, contact Long Island Divorce Mediation for a free consultation.