Why Pre-Divorce Budgeting Is Key

    As you cope with the emotional upheaval of the divorce, your budget represents the earth beneath your feet — something knowable, routine, and reassuring.

    There are several other ways to frame the importance of budgeting before a divorce:

    • Budgets help determine post-divorce financial needs. A family expense and income analysis establish your past standard of living, aids planning for short-term temporary expenses associated with the divorce itself, and helps you determine financial needs for post-divorce maintenance and child support.
    • Budgets identify hidden expenses. Typically, couples divide tasks, so if you weren't responsible for certain areas — like insurance, home maintenance, healthcare, or childcare — you might be in for a surprise. Listing out all your expenses can help you forecast future needs and prevent a backward slide.
    • Budgets can help put you in a position to negotiate. In some cases, a detailed budget can highlight for example, inconsistencies between your former partner’s declared income and actual household expenses, and it may uncover potentially attempts to underreport self-employment earnings, assets, or investment returns.
    • Budgets can help maintain financial boundaries. All too often, unrealistic assumptions lead to unsustainable spending. Budgets can give you a clear picture of your present spending and future needs, which helps you potentially reach a fair settlement and live the post-divorce life you've imagined.

     

    Get Pre-Divorce Budgeting Advice

    To get started with a pre-divorce budget, you might tap resources like Dave Ramsey's cash flow planner or an Excel spreadsheet tailored to your needs.

    Alternatively, you may seek guidance from a wealth advisor with experience in divorce financial planning who can provide personalized assistance throughout the budgeting process, guiding you to manage your finances through this transition.

    Here are some of the tasks involved in financial planning for divorce:

    • Collect data. Gather detailed financial records, including check registers, credit card statements, receipts, and investment transaction records, to create accurate historical, temporary, and post-divorce budgets.
    • Get organized. Now's the time to put your financial ducks in a row. You’ll need court-required documents like tax returns, 401(k) statements, and asset and liability reports.
    • Soul search. Write down additional context and perspective on your spending habits and lifestyle choices that might enhance the court’s understanding of your circumstances.
    • Evaluate options. Look at levers you can pull to increase savings, optimize spending, or reallocate resources, without significant lifestyle changes. Seek updated investment planning advice.
    • Manage debt. Once you’ve assessed your existing liabilities, you might create a debt management and repayment plan or explore other strategies to accelerate debt payoff and gain a stronger financial position.
    • Activate systems. Put as much as you can on autopilot. Use an expense tracking app, set up direct deposits and autopay, and schedule regular financial reviews to tailor your post-divorce financial plans.

    Would you like someone to help guide you through the pre-divorce budgeting process? Find a Certified Divorce Financial Analyst (CDFA®) at EP Wealth.

     

    DISCLOSURES:

    EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this article. EPWA has used its best efforts to verify the information presented. However, EPWA cannot guarantee the accuracy or completeness of the information included. All expressions of opinion are subject to change without notice.

    Hiring a qualified advisor and/or financial planner or working with a budgeting app does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.

    Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.

    The apps and websites referenced here may assign a user or administrative fee. Additionally, in many cases, your information may be used or sold to other third-parties. Please verify and understand the manner in which your information will used and the level of security/confidentiality prior to utilizing.

    Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. Always consult a financial professional regarding your unique financial circumstances.

    As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, capabilities and services that it offers and can service. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions with the appropriate professionals. EPWA makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of opinion by the author are subject to change without notice.

    EPWA is not in the business of providing legal services or advice. Always consult your tax advisor and/or attorney regarding your specific situation.
    The Certified Divorce Financial Analyst (“CDFA®”) that are employed by EP Wealth Advisors, LLC are not practicing attorney, accountant, tax professional, or legal expert. All assessments and subsequent recommendations limited and are performed exclusively under the guise of financial planning. An attorney must be retained in order to professional and accurately assess legal options and/or to provide counsel. We also recommend consulting a CPA, accountant, or tax professional.
    Hiring or working with a CDFA® does not guarantee or ensure that a client or prospective client will experience encouraging or favorable results.
    The decision to work with a CDFA® professional will differ amongst clients and depend on individual circumstances of each respective client. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC and/or a CDFA® will satisfy your divorce service needs. Services offered by other professionals may align more to your specific needs.

    EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability. Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions with the appropriate professionals. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. Please consult a professional Financial Advisor before applying any of the approaches or strategies made referenced directly or indirectly in this publication.

    The information presented here is not intended to be regarded as a complete list of things to consider, including but not limited to, categories, services, or qualifications that a client or prospective client should contemplate when assessing or comparing Financial Advisors and/or Firms. As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, and capabilities that it offers. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.

    There is no guarantee nor is the intention of this article to establish any sense of assurance, that, if followed, the strategies referenced here will produce a positive or desired outcome. In fact, there is no guarantee or warranty that any of the steps detailed will enable the ability to achieve appropriate, successful, profitable or desired results. The possibility of unfavorable and unsuccessful results is not lessened by the information and strategies made referenced here.

    FIND A FINANCIAL ADVISOR NEAR YOU

    Our breadth of coverage across the U.S. means we’re local—here to serve your needs at your convenience.

    SUBSCRIBE AND STAY CURRENT WITH EP WEALTH'S INSIGHTS