When you divorce, you quickly realize that maintaining two households is much more expensive than sharing a single home with your spouse and family. Many people underestimate the amount of money they need to live a financially independent, comfortable lifestyle after separating.
Avoid this common mistake with these tips to prepare financially for divorce.
Audit your household finances
If your spouse handles the finances, begin gathering and reviewing bank account records, tax statements and other documents so you can develop a clear picture of your shared assets, cash flow and debt. If you already play an active role in money management, you have the information you need to understand marital income and expenses. Before negotiating any kind of divorce agreement, you and your spouse must both provide full financial disclosure. Tell your attorney if you think your spouse has misrepresented income or assets.
Make a realistic budget
Begin to plan for your financial life after divorce by listing your monthly income and expenses. You may find that you must spend more than you earn when you total the cost of running a home. This situation is common for parents who have left the workforce to raise children.
Value assets accurately
Many people do not understand exactly what assets such as their homes, vehicles and household items are actually worth. This is especially true for couples who have collectibles such as art or antiques. A professional valuation may be essential to understand how much these items are worth.
Taking these three steps may help you ensure a fair division of marital assets and support your transition to the next phase of life.