If you're heading into a divorce, understanding common expenses associated with the process can help you budget for the dissolution of your marriage more effectively. In turn, you can use the money you save by budgeting to springboard into a better life post-divorce. Today, we're exploring what costs you need to be on the lookout for as you move forward with your divorce.
Many people underestimate just how drastically their divorce will affect their taxes. Newly divorced individuals lose the tax benefits married couples receive, which can increase how much they pay to the IRS. If there was an earning disparity between the spouses, they might also be in different tax brackets post-divorce.
How your property division case shakes out also affects your taxes. For example, if you keep the marital home, you may have to pay for estate taxes. Conversely, if you sell it, you may get saddled with capital gain taxes.
You should speak with your accountant and discuss how your divorce may impact you financially to get a better idea of how your taxes may change post-divorce.
Changing Contracts May Come with Unexpected Costs
At any point in time, most of us are engaged in a variety of legal contracts. Your phone, utility, internet, and insurance plans are all forms of legal contracts, for example.
Many married couples buy into these contracts together, and utilize married couple or family plans to get certain price-breaks or benefits. But when you divorce, you'll need to adjust those contracts, so you no longer share them with your ex.
Simply separating the contract may come with costs (for example, changing a phone plan to a single-payer often comes with a fee). Losing the bonuses or price-breaks associated with family plans can leave you paying out hundreds more over the course of a year, so budget for increased general costs.
Be Prepared for Post-Divorce Expenses
Many people underestimate their post-divorce expenses. In addition to potentially needing a new living arrangement and transportation, you'll also have to pay for the basic necessities—tools, appliances, etc. It may not seem like a lot, but it will quickly add up if you have to buy it all at once. If you have children, you may also need to buy new items for them.
Make a list of all the items you'll need post-divorce and start looking at prices online. If you can, bookmark items early and check in every so often to see if they're on sale. A little budgeting and thrifting can easily save you hundreds (if not thousands) post-divorce.