In this post we discuss the top 5 post divorce money mistakes that you need to avoid at all costs. Others have made these mistakes and lived to regret it.
Breaking up a family, starting two separate households, and building a fresh start all come with enough financial and emotional burden. After a divorce, it’s essential to make a new financial plan to protect yourself from an even heavier burden. With all the emotions involved, there’s no reason to add to that stress. Listed below are 5 of the top areas where divorced couples make mistakes to help prevent you from making these same mistakes.
Rethinking your budget
It’s easy to get accustomed to and comfortable with a certain standard of living during marriage. During a divorce, it can be really difficult for those people to accept that their lifestyle can’t stay the same. One of the first steps you should take is rethinking your budget as a newly single person. Figure out where you can cut costs, especially in the first six months to year after a divorce. Outlining your budget and new goals will help prioritize costs and show where you spend too much.
Buying your children’s love
A lot of divorced couples agree that maintaining their children’s standard of living is really important to them. They want the kids to feel as little impact as possible so they continue paying for expensive schools or lessons or trying to win the favor of the kids by spoiling them with gifts. All of leads to a major mistake for the parents. Avoid trying to be the favorite parent through material means. Whether or not you’re the breadwinner of the family, your kids care most about you and not about what you buy for them. Doing this with the children can quickly lead to unhealthy competition between the parents and that benefits no one. If possible, make a pact with your ex to maintain your kids’ lifestyle as much as possible and within reason and to not ever get caught in competition. What’s most important is that your kids still have both their parents.
Maintaining joint accounts
Separating all joint bank and credit accounts as soon as possible can protect both partners in the event of financial mistakes. If your ex makes some financial blunders, you don’t want those to also be your blunders. Lenders don’t care about divorce, they care about getting the money they’re owed. So in the case of a divorce, even if your ex is who is supposed to pay off a debt, the mortgage, or a loan, it doesn’t mean you don’t maintain responsibility in the lender’s eyes. Keeping joint accounts can hurt your credit score if your ex misses payments. As soon as possible, you should get all accounts needed in only your name.
Keeping the house
It can be tempting for a parent to want to keep the house. Whether it’s so that the children maintain stability among all the other changes going on, to keep a sense of power, or to keep the memories, this can lead to a big mistake. A single person, especially if you relied on your ex’s income, may not be able to handle the property taxes, homeowner’s insurance payments, maintenance and upkeep, and other costs that come with owning a house. Though it might seem like an important asset, in a divorce, a house can quickly become a major burden. It’s often advisable to sell the house and for both parents to move into a dwelling that fits their budget.
Revenge through finances
When emotions take over, it gets really easy to make huge financial missteps. A common occurrence among scorned exes is spending the other’s money to get revenge for the pain of a divorce. Not only will this lead to a whole slew of new financial problems, it won’t make you feel better. Whatever the motive behind revenge spending is, it’s almost sure that you won’t find what you’re looking for by charging up debt. The only thing you’ll definitely accomplish by revenge spending is a more complicated divorce process.
An easy way to make sure the money mistakes don’t begin, is to start making smart financial decisions before the divorce begins. If you feel it’s possible for you and your ex to manage the divorce without your attorneys, you can save a lot of money. You can find everything you need on the Internet, from free online divorce forms to a complete case review before you turn your forms into the state.
Making a conscience effort to make smart financial decisions is a really good step to take to moving on from divorce. You’ll have years of emotion to process so protect yourself from also having to deal with years of debt from making these common mistakes.