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Can I afford to get a divorce?

On Behalf of | Jan 22, 2025 | Divorce |

Divorce can be a significant financial change. Before you begin the process, it is important to evaluate whether your income can cover your expenses after divorce. Understanding how your financial situation can shift is crucial to making a decision that is favorable to you.

Income vs. expenses

Start by reviewing your current income and expenses. For example, your monthly income is $4,000. Essential costs such as housing, utilities, food, transportation and debt repayment may total $3,500. If you also pay $300 per month for childcare, your expenses may reach $3,800. This leaves you with just $200 for savings or discretionary spending each month. After divorce, you will need to estimate if your income can be enough to cover these costs once you are living on your own.

Health care and retirement

In many divorces, one spouse may be covered by the other’s health insurance. After divorce, you may need to purchase your own insurance. A plan may cost $400 per month, adding a new expense. You should also consider the division of retirement savings. If you have a 401(k) worth $50,000, you will need to understand how much of that your spouse will receive, and how that will affect your future financial planning.

New housing costs

After divorce, you may need to find a new place to live. For example, if you currently live in a home with a mortgage and decide to rent after the divorce, the cost of a similar apartment may be higher. This increase in housing costs can impact your monthly budget. Additionally, you may need to pay a deposit, adding to your expenses.

Drafting a post-divorce budget

Creating an estimated post-divorce budget can help you understand your financial needs. For example, if your total income is less than your monthly expenses, you may face a shortfall each month. Reviewing these numbers can help you understand whether you need to reduce spending or find ways to increase your income if you divorce. These can include seeking a higher-paying job, a modification of a child support order or additional alimony.

Before deciding to divorce, it is vital to have a clear picture of your financial future. An attorney can assist you by outlining the legal and financial implications of your divorce.