Navigating a divorce can be extremely difficult. There’s a lot to think about, particularly when it comes to your finances.
If you’re transitioning from a dual-income household, you may be worried about how your finances will look as you split.
Here, we explore four key financial challenges you may face and how to handle these as you move into the next chapter of your life.
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Managing divorce costs
There are costs you need to consider when starting your divorce, such as solicitor fees, court costs and the price of seeking expert financial advice.
These can add up quickly, so it’s important to budget for the various expenses you’ll encounter.
You may also want to consider options such as an online divorce which typically involves beginning proceedings and providing key information digitally. This can potentially cut the cost of your fees.
Try to be as organised as possible during your divorce. The more straightforward your divorce is, the cheaper it could be – as a solicitor will spend less time on your case.
Dividing assets
One of the most significant financial challenges is dividing marital assets like property, pensions, savings and investments.
How you split these will depend on your unique circumstances. For instance, if you own a home, you may decide to sell it and split the money you make to buy separate places.
Or, if you have children together, you may choose for one of you to stay in the property with your kids until they turn 18.
The government explains that if you both “agree on how to divide money and property, you need to apply for a consent order to make it legally binding”. If not, you can seek mediation or get a court to decide for you.
Organising maintenance payments
If one of you has a higher income, maintenance payments may be required to help with the other person’s living costs.
This can be agreed for “a limited period of time” or “until one of you dies, marries or enters into a new civil partnership”.
If you have children under 16 (or 20 if they are in education), you may also need to arrange child maintenance payments. This is to cover your children’s living costs when one parent doesn’t live with them.
This can be done privately or through the Child Maintenance Service, which can calculate an amount and organise payments.
- Adjusting to a single-income household
Transitioning from a dual-income to a single-income household can present significant financial challenges.
It’s important to set a new, realistic budget for ongoing household expenses. Once you’ve reached a financial settlement, establish your total income and consider any debts or fixed expenses you have.
From here, you can work out how much money you have for essentials such as household bills, mortgage/rent payments and food shopping.
You can also figure out your new disposable income and set a monthly budget for things like entertainment and socialising.
While navigating your finances during divorce may feel daunting, rest assured there are people and processes to help you along the way.
If you’re unsure about the best path forward, it’s worth speaking to a specialist divorce solicitor. They can look at your unique circumstances and guide you on the appropriate steps to take.
And if you’re struggling during this tricky time, reach out for support. You could speak to friends and family, contact your legal advisor, speak to a counsellor or get help from Citizen’s Advice.
