Episode 67 of the Divorce and Your Money Show discusses ways to manage your finances while being separated.
You are separated when you are not living with your spouse anymore, but have not filed for divorce yet. If this scenario has occurred, you need to be very careful about a few key things that can have serious implications.
Separation is the precursor to divorce, and it can mean a lot depending on your situation. It can either have great benefits or disadvantages, depending on the state you live in and how long the separation is going to last. While you are separated, things like assets and debts that you acquire could still be considered marital property.
Divorce is ultimately a legal, business transaction, which is why making rational decisions during this time is really important; do not let emotions get in the way. There are three things that you need to do to keep your finances in check:
- Create a budget.
- Create a written agreement.
- Cut unnecessary expenses.
Even though it sounds like a complicated process, creating a budget is important. You just need to have a good sense of your expenses—and your income after taxes. You might have to pay for two homes once you are separated; that means doubling the cost of living, while your income stays the same.
If only one spouse is the primary earner, creating a written agreement is necessary. A written agreement will make sure that the other spouse agrees to pays for your expenses while you are separated; this will serve as protection in states that recognize separation. It is worth it to go to your attorney and set up this agreement.
Following separation, you will need to trim down your expenses, and you should seriously consider cutting the expenses that you do not really need. Now that you have two households to support, you will be saving yourself a lot of trouble after separation.
These things are not difficult to do. You just need to sit down, take some time, and do them. Then you will be much more prepared for your future during this difficult time—whether you get back together or divorced. To make sure your finances are in check, you need to work out the aforementioned things with your spouse.
Key Learning Points:
- Regarding both your relationship and finances, there are some things you need to be aware of.
- In some states, staying separated can have serious implications—if you decide to get divorced.
- While you are separated, assets and debts that you acquire could be considered marital property.
- There are three things that you need to do to keep your finances in check: create a budget, create a written agreement, and cut unnecessary expenses.