Even when the relationship ends on the best of terms, the divorcing couple will likely have to argue their way through several negotiations. Compromises relating to property division, debt division, support and parenting plans must be reached before the divorce is finalized. During this process, however, it is crucial that you stay focused on your own financial health.
While every situation is unique, here are five financial mistakes you can avoid in your divorce:
- Do not ignore your expenses: It is often one spouse who manages the money in a marriage. If this is not you, it is wise to learn what your debt-to-income looks like. This knowledge can also inform your negotiations as you work toward the settlement. If you don’t know how much money you might need to cover expenses, how can you agree to a financial plan?
- Do not be afraid of conflict: While most people tend to avoid confrontation, this is not the time or place. This is not to suggest that every negotiation should turn into a shouting match, but some people will often choose to quietly acquiesce rather than argue their point.
- Do not limit your vision: Your financial future is a big picture item. During the divorce, you might develop tunnel vision, for example, by only focusing on the process of property division. In fact, your financial future is reliant upon all these factors including property division, debt responsibility, spousal support, child support and child custody. Failing to account for one factor could mean disaster.
- Do not get too attached to certain assets: While the need to reach a fair split is paramount, some divorces become needlessly argumentative as both parties fight over sentimental property. This isn’t to say that you shouldn’t battle for what is yours, but when you start fighting simply to prevent the other spouse from gaining the asset, you needlessly lengthen your divorce process and increase its cost.
- Do not assume the first option is the best one: No matter if you are evaluating a business valuation, property appraisal or alimony agreement, you should consider numerous options. Sometimes having a second or third option for resolution might result in better solutions.
It might be easy to become confused and frustrated during a complicated divorce process. It is important to remain focused on your financial strength and the future you are building for yourself after the divorce.