Posts Tagged ‘ways divorce affects finances’

What Are 5 Ways Divorce Will Affect My Finances?

Tuesday, November 10th, 2015
  1. Legal Expenses: Getting a divorce is not only a long and difficult process, but it also can be financially impactful as well. Because divorce cases are generally so long in duration, it’s not as if you make one payment to your attorney (and your spouse’s attorney if the court finds you must cover their expenses), but rather there are multiple payments throughout that you will have to make, and when it’s all said and done, the cumulative total from legal expenses alone can be really debilitating. This is why couples often seek to settle quickly, if they can, and outside of a courtroom. However, some cases are too complicated, and consist of too many variables, to be settled quickly and before a judge is involved.
  2. Post-Divorce Childcare Expenses: Now that you are on your own (presumably), and are using your own personal income to cover expenses for your child, you would be surprised how much it will take from your bank account. It is easy to forget how expensive children can be when the costs are shared between you and the child’s other parent, because you are simply only paying for part of the expenses. This is a completely separate issue from child support, which is paid to the parent rather than to the child’s insurance company or the like. Child support, if you are the parent that will be paying, can also be a huge expense, and is something you should be aware of, especially because if the court decides you are to pay child support, it’s not optional.
  3. New Taxes: Now that you and your former spouse are no longer together, you will have to file independent (single) tax returns and other forms, as opposed to a joint tax return that you and your spouse may have had during the marriage. This change in itself can considerably raise the yearly taxes you have to pay. In addition, just by filing your taxes with a single status, your taxes will be higher than joint tax filings.
  4. Retirement Plan: Because you will now be the only one putting in money into your own retirement account, the costs that come with plans like Pension’s, an IRA or a 401(k) will seem exponentially higher. Much like with childcare, because you are now making certain payments on your own, you are no longer only paying part of the total, but the entire bill.
  5. Personal Insurance Policies: When you’re married, prior to even considering divorce, you envision your partner and yourself together for life (till death do you part, right?). Because of this, you may not have a health care insurance policy for yourself for when you get older, and health complications begin to arise. Now that you aren’t with your former partner, make sure you are covered for the long-term with regard to your health. While these are very important to have, bear in mind that healthcare coverage for yourself can be very expensive, especially since you are paying the entirety of the policy. When all of these variables in play, the divorce process, as well as the results that will follow, end up accumulating into a huge and overwhelming hit to your financial well being.