Saving money and managing budgets and finances is a task that is not always simple, let alone during life events such as divorce. This process, besides emotional trauma, can involve unforeseen costs and significant financial impacts that can be long-lasting. By investigating your options and taking precautions, you may be able to avoid unnecessary costs or save in areas you weren’t aware of. Here are 14 ways in which you can save money during a divorce.
Avoid unsolicited advice
You may notice that when faced with the divorce process, friends, family and those you discuss it with will have a horror story to share or tell you what you should or shouldn’t do when it comes to handling finances during your divorce.
In this situation, it is best to avoid this kind of 3rd party advice and stick to that from those who you trust or are qualified to give it.
As each financial situation differs, a financial expert or attorney will have all the facts to assist you in making the best financial decisions to make your divorce affordable in the long run.
Consider Your Spouse
While dealing with your soon to be ex-spouse, it may be challenging to even begin to think of their best interests or taking their financial well-being into account.
That being said, when it comes to mediation or negotiation of assets and finances, being able to consider your spouse’s best interests, as well as your own, will allow you to possibly conclude your divorce in a shorter time frame.
When such processes or negotiations can be shortened, they save time as professional hours needed from attorneys will be shortened, thus saving you and your spouse money.
Close Joint Accounts
When you begin to institute divorce proceedings, a prudent move would be to close all joint accounts which you and your spouse have, especially those which operate on credit.
A disgruntled spouse could spend excessively using such funds and you will be partly responsible for ensuring that credit is paid off. If such a situation ends up in large sums of debt, which are difficult to pay off, your credit score could be affected.
To save money in the long run, ensure that closing all joint accounts is one of the first steps you make. Read more about joint accounts here: https://www.finder.com/joint-bank-accounts-divorce
Open Your Own Checking Account
Following on from the previous point, open up your own checking account which is only in your name.
This will allow you to start building up a financial history and credit record which could assist you, in the long run, should you need to apply for a loan or use your financial history for any other application. This also provides you with complete control over your own money during the divorce process which should give you peace of mind.
If you already have your own bank account in your own name but your spouse had a card or access to this account, it is advisable to cancel their card and access to avoid any additional spending which is not authorized by you.
Divorce comes with many additional and sometimes hidden costs which are difficult to anticipate. To accommodate for these costs and avoid financial stress or worry, we recommend that you save as much as possible.
Open up a savings account and set up a debit order from your checking account to ensure a ‘forced’ saving every month.
This will give you a buffer in the event that you need to pay for certain expenses for yourself or your children that would previously be split between you and your spouse. More useful information here:
- Keep Track of Expenses
Throughout your marriage, you may or may not have had a lot of involvement in the tracking of finances.
If you are not accustomed to tracking your spending on a regular and consistent basis, this is a great opportunity to start. Spending and expenses can quickly get out of control so it is important to check your bank statements regularly.
Do a review of your debit orders and all the items you spend regularly on. You may find there are a few ways you can cut down on unnecessary costs.
Create a Budget
The best way to effectively save money during your divorce process is to create a budget that allocates a spending amount for every area of your lifestyle. Use these allocations to guide your spending each month. This may feel like a lot of hassle in the beginning but you will get used to tracking your spending over time and it will soon become second nature. Tracking your spending this way will also allow you to save and allocate money to your savings account which you have set up.
Set up your own Health Insurance
Setting up your own health insurance may not seem like an obvious option when trying to save money during your divorce. However, should your health insurance has previously been attached to that of your spouse, it is important to set up your own.
Medical emergencies and illnesses can often blindside you and it is important to ensure you are always covered. In the event that you need to cover an expensive procedure for the hospital stay, you will be covered by your insurance company and not have to fork out the money from your savings.
Update Your Will and Beneficiaries
From the time you initially set up your will and beneficiaries to when you decide it is time to get divorced, the contents of your will and who your beneficiaries are may have changed significantly.
This is a good opportunity to review your will and how any of your assets or savings will be allocated. You may have children who you would like to allocate assets to who weren’t around when you initially drew up your will.
Update Power of Attorney
During the course of a marriage, many spouses will assign power of attorney to their respective spouses for convenience purposes. Once you decide to get divorced, it is advisable to update this and remove your spouse’s ability to make decisions on your behalf and sign legal documents.
Should the relationship between yourself and your spouse not be amicable, taking this step to protect yourself from a legal and financial point of view is extremely important.
Apply for a Divorce Online
In more recent times, states within the US have made it easier to apply for an online divorce. By downloading and filing your divorce papers online, you can save money and time from avoiding queues at the courthouse to saving on to saving money on attorney fees.
Many local county court websites provide clear guidelines on exactly how to file for your divorce online and provide lists of all the supporting documents which are needed. Completing as much of the process without an attorney is one of the best ways to save money as attorneys’ fees can be one of the biggest costs related to divorce.
Make use of a Mediator
Mediators are a cost-effective way in which to discuss and make decisions between you and spouse during the divorce process.
While you may still need an attorney for certain elements of your divorce, making use of a mediator for the majority of the process will save you a significant amount of money.
While a mediator cannot make decisions on your behalf or provide legal advice, they are extremely effective in facilitating discussions and concluding on decisions that need to be made between you and your spouse.
Many spouses make the decision, before divorce proceedings are final, to splurge on expensive assets or luxuries as either an emotional consolation or an opportunity to spoil themselves or dispose of funds that could otherwise be distributed to their spouse.
While this may be tempting, the costs of divorce can escalate past your expectation and it is advised to save as much money as you can leading up to the process. This will stand you in good stead as costs may escalate during or possibly even after divorce proceedings
A do-it-yourself divorce is coming to a lot more popular as not only the rate of divorce has increased but also the associated costs. Many spouses may not be able to afford an attorney or mediator fees at all and so take the decision to handle as much of the divorce process on their own as they can.
Many attorneys will offer an initial consultation for free which some DIY divorce spouses may use for the legal guidance before taking on the entire process on their own