Divorce is hard enough without adding a global pandemic into the mix. These are unprecedented times and if you are in the middle of the divorce process, I can only imagine what is going through your mind. I was going through my own divorce in 2008 when the stock market crashed due to the lending crisis. I saw our retirement account balances drop to precipitously low levels and I worried how that would affect my own retirement in the future.
Even though I couldn’t do anything about the stock market, just like there is nothing we can do about the current crisis, there is still one thing that you have complete control over – how you spend your money.
Managing Your Cash Flow
As a Certified Divorce Financial Analyst®, I spend a great deal of time with my clients working on their cash flow or budget reports. Understanding where your money goes on a monthly basis is the key to getting through the divorce process. You can’t make informed decisions about where to live or how much support you will need unless you know what it takes to run your household. I use a four-page expense worksheet to help my clients accomplish this task, which is daunting at first, but once they go through it they begin to see where all their money goes. Then they can find ways to reallocate or cut back. I do this for both my divorcing clients and my financial planning clients.
The exercise of going through 6 -12 months of bank statements and credit card statements to add up your living expenses can be very empowering. It can also be very tedious, but I promise you, once you categorize everything, you will see what you’re spending and realize that you can make better choices with where you spend or don’t spend, your money. You will be in control of your money rather than your money being in control of you.
What does all this have to do with the global pandemic and your divorce? Getting a handle on your expenses now, during a time when we really need to watch what we spend, will help in the outcome of your divorce. Having a clear understanding of what it takes to live in your house will help you decide whether or not you can afford to stay in the marital home after the divorce. It may also help your attorney determine your ‘need’ which can help to dictate the amount of child support and/or alimony you may need.
Make Smart Choices
There are many decisions we have to make these days relative to how we spend our money. The temptation to buy things on line because we are stuck at home can ruin your budget. The last thing you want right now is credit card debt. And, hopefully your job and paycheck is secure, but if it is tenuous, then you must make smart choices with your money – do you really need that item, or do you just really want it?
Bottom line, the best thing you can do right now for you and your family, is to remain in control of your money. If you are concerned about your other assets, like investment accounts or retirement accounts, consider reaching out to a CDFA® in your state so they can help you with a preliminary financial analysis.
Be informed, be empowered and take back control.
For a copy of my 4-page Cash Flow Worksheet, please email me at firstname.lastname@example.org.