A divorce can affect someone’s finances in many ways that are expected, such as through child support, alimony or the loss of a second income. However, there are other ways, that a divorce can unexpectedly affect one’s finances.
Childcare expenses can quickly rise when there is only one parent in the household. While an amicable divorce may see both parents sharing childcare duties, however, this is not always the case. Divorced parents can often pay much more than expected if they find themselves working more hours to make ends meet.
Legal expenses can also be higher than expected during a divorce if there are children involved or substantial property. If the divorce is contested, an experienced attorney may be needed to fight for what is rightly yours and for what is best for the children.
And then there are taxes, which are much more when filing as a single person than they are for someone filing jointly with their spouse. Not only does this mean you will see less on your paycheck, but if you expect a large tax refund each year, it could be much less once the divorce is final.
Insurance expenses are also higher. In most cases, auto insurance rates are higher for those who are single than those who are married. Many married people may not think about long-term care insurance because they expected their spouse to take care of them when they got older. When divorced, it will be important to consider purchasing a long-term care policy to ensure you are protected.
Retirement planning will change considerably when only one person is contributing to the retirement accounts. In order to ensure you have an adequate retirement income, you may need to start directing more money into your 401K, IRA or other pension plan.
There are many financial considerations during a divorce that makes representation by an experienced attorney crucial to protect your interests and help you pursue the best possible outcome.
Source: tampabay.com, “5 ways divorce could affect your finances” No author given, Apr. 28, 2013