Yahoo Finance Managing Your Finances When You're Separated
You're in limbo.
If you and your husband or wife are separated, you may feel like you're divorced, but you are actually very married. This means that you may be emotionally split from your spouse, and perhaps living in two separate locations, but your money is still likely very much intertwined.
And while managing your money may not be difficult if you and your soon-to-be ex each have your own careers and income and your finances were always kind of separate, it can be another story if you've been dependent on the other financially.
If you're on the brink of separation, keep the following in mind.
Your money situation is about to change. You know your life is changing, but you may be tempted to keep as much of it as unchanged as possible, especially if you have children. But the sad fact is, you're going to have to make financial sacrifices somewhere, says Aviva Pinto, a certified divorce financial analyst and a director at Bronfman Rothschild, a wealth management firm in New York City.
The biggest challenge she faces with her clients is "getting them to realize one divided by two doesn't equal two. They all assume their lifestyle will remain unchanged even though they now have two households that need to be supported with the same pot of money."
So if you can get into that mindset right away, that you and your soon-to-be ex will both be living on less, it may help you avoid having your spirit completely crushed later.
[See: How to Live on $13,000 a Year.]
Preparing a budget now would be wise. And preferably do it together, especially if you're currently living apart.
"Based on the new living arrangements, you both will need to decide who is paying for what and exactly how much you individually can afford monthly," says Russell Luna, a certified divorce financial analyst and owner of Luna Financial Advisors in Denver, Colorado.
He also recommends you start making a budget for your life post-divorce. Because as you hash everything out with your spouse and the attorneys, you'll need to know those little details.
Remember the golden rule. You know, do unto others as you would have them do unto you. Then there's the old joke, often attributed to the comic strip, "The Wizard of Id" -- he who has the gold makes the rules.
Too often that can happen in a separation; the person who makes the most money figures that they're entitled to call the shots. Especially if you aren't too fond of your partner right now, you may want him or her to suffer financially. But remember karma: being mean is just as likely to come back and hurt you (not to mention any children in the equation).
Your job during a separation is "not just to divide. It's to preserve responsibility. Your emotions can inform or derail that goal," says Pamela McGinnis, a divorce consultant with the Glass Jacobson Financial Group in Owings Mills, Maryland.
She adds: "Wasting or hiding marital assets hurts your family and will likely cause for longer negotiations, court battles, higher legal fees, legal implications, higher debt or emotional baggage that will just weigh you down and stall your ability to move your life forward."
So, really, a lot of what you need to do with your money in a separation involves common sense and decency. If you've moved out into an apartment, and your spouse is depending on you to pay the water bill on time, don't play games.
"Continue paying all your bills, utilities and your mortgage as you normally would," says Brooke French, a family lawyer with Boyd Collar Nolen & Tuggle in Atlanta.
Continue to communicate. Sure, it's hard to do if you two barely can stand to speak to each other. But if you have children, you're going to have to continue keeping a dialogue open, ideally, anyway. Discussing your money can be good practice for re-learning how to talk to each other.
In any case, if you want to make any changes to how you pay those aforementioned bills, "like frontloading mortgage payments or paying extra to pay down student loan debt," says French, she recommends that you don't do it without talking to the other spouse and getting written permission from him or her. (Written permission may seem like overkill, but you know how lawyers are, and if you have a volatile or wishy-washy spouse, it does sound like a very wise idea.)
And you may be tempted to cut back on expenses where you can, and that's a good idea, French says, but, again, decide this jointly.
"One person shouldn't just cancel the lawn service without speaking with the other spouse," she says.
[See: 10 Oddly Practical Things You Can Rent.]
Don't make any big purchases or money decisions. Virtually every divorce expert will tell you this. Want to buy a new dishwasher? A car? Don't, unless you don't mind possibly losing it when the divorce proceedings get underway. You are still married, after all.
"If you do make a purchase during the separation phase, you may end up having to divide that with one another once the divorce is finalized," Luna says.
Jeff Anderson, a family law attorney in Dallas, concurs. "Around Texas we have standing orders, which prevent divorcing spouses from spending money on anything except normal living expenses, business expenses and paying their attorneys. Those orders aren't the norm in all states, but they present a good guideline," he says.
He also says you don't need to feel bad about spending some money on yourself.
[See: 6 Ways to Treat Yourself on a Budget.]
"Divorces are hard on everyone, so don't feel bad about treating oneself to a nice dinner or a manicure," he says. "Just avoid buying a Ferrari or a new beach house."
Unless, again, you don't mind if the judge decides your soon-to-be ex is the one who deserves the beach house. In that case, go nuts.
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