3 Key Steps to Better Manage Finances Post-Divorce

“Money often costs too much”

-Ralph Waldo Emerson

We humans have deep rooted primordial survival instincts: to protect our young and to protect our ‘stuff’.

It’s not shocking to read that money is often touted as one of the leading causes why couples get divorced. So, it is no surprise that money is also one of the biggest challenges we face after taking the leap to separate ourselves from the legal bounds of marriage.

Money is often an uncomfortable topic of discussion for many couples, even in amicable times. Hence, the anticipation of a money pool being split into two smaller, shallow pools can become the root of much anxiety. During  times of financial stress, dealing with new personal debt, bills, expenses, etc.. can make even the strongest feel vulnerable. The fear of losing financial safety can change people, quickly.

Now, imagine trying to have an  ongoing money relationship with the individual you’ve shared your life with, the same one signing divorce papers, the same one who has now clearly splashed into ‘your’ money pool. Primordial survival instincts can kick in to high gear. Financial strategy can quickly shift from one common effort into two, very opposing forces.

Avoid the financial tug of war.

During divorce, there are numerous financial gyrations that prove this seemingly perpetual tug of war will challenge your patience (and at times, your sanity). The battle for who pays for what and how much, for how long, will be influenced by a number of factors – including which side of the divorce fence you’re on. Costs  add up during the process, making it hard to consistently agree with the ‘opposing side’ on fair amounts.

To this point, the idea that we can amicably collaborate to manage expenses after a divorce is one tough, but necessary pill to swallow. Here, it is essential to evolve one’s financial instincts from the primitive, to the enlightened. Accept that you and your spouse are now two separate entities, but still working together on a common financial survival strategy.

Here are three steps to help couples manage their expenses and stretch their money further:

1. Collaborate

An essential first step to effectively maximize your new financial survival strategy is to work together. One of the worst mistakes to make during this time is to give in to a sense of entitlement. Since both money pools are smaller, both adults need to be realistic about adjusting spending habits and be fully aware about how expenses are to be paid. If both couples can collaborate and show efforts to spend less, goodwill can be quickly earned.

Do not make senseless financial demands to satisfy thirst for revenge or greed. That will sow the seeds of war. Accept that lifestyles must change. For parents, co-parenting will be difficult enough, especially when making day-to-day decisions for your children. If you both collaborate and to start your financial diets early, everyone will get used to it quicker.

The result: long term financial goals will be much easier to reach.

2. Organize

For parents, each couple will usually have miscellaneous expenses to share. Miscellaneous expenses are on top of standard support payments and might include tuition, sports, music lessons, summer camp, uniforms,  birthdays, graduations etc..  This will vary greatly depending on how many children are involved and their activity level. Keeping and sharing a clear and concise miscellaneous expense tally requires a system that will facilitate the clear responsibilities of expense sharing.

Structure is needed to avoid expense items from ‘falling through the cracks’. Check with you co-parent BEFORE making large one-time charges that need to be shared.  Agitation arises when unexpected costs arise (which always happens with children). Be mindful that animosity and stress can be passed onto your kids like a perfume in a small room.

In today’s modern world, there are endless ways to organize, track and pay everything. Find the best financial / expense system for both parents and use it to your advantage to get things in order.

3. Prioritize

Getting everyone involved in prioritizing expenses is a great way to create a natural financial boundary and limits the occurrences of ‘financial shock.’ While they often don’t show it, children are the most affected by the changes of divorce. Co-parenting will take work from both sides to soften the effects. It’s important to remember, children first – no matter what. So, do involve your children in prioritizing expenses, but step lightly.

While it is a good idea to teach financial responsibility during this time, do not involve the kids in direct challenges / arguments about money.  For example, telling the kids that ‘due to lack of financial support, they can’t continue their favorite sport or music lesson’ will only create resentment for a parent or home situation. The children will already have enough on their plate understanding the emotional and physical repercussions of the divorce.

Instead, teach financial responsibility by example. Show the kids how prioritizing expenses and saving here and there can stretch your money further and further. Show the kids that sacrificing on some costs now can open opportunities to make more meaningful purchases in the future.

The handling of shared expenses post divorce can feel like walking a tightrope, blindfolded. However, it is possible to perform successfully with co-operation on both sides. Everyone will be adjusting to a new normal, which isn’t always easy.

If both parents can come to an agreement that will show good faith and responsible management of expenditures, each might come out of the ring with a few bruises instead of in ruins.

*This article was originally posted and written for Smartparent.com 

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