Planning for the future is important, but complicated. This is especially true when it comes to thinking about finances after divorce. There are a number of decisions you might face during the divorce process that can affect your future, and how you handle them will also impact how financially stable you are.
For example, have you considered the cost of future housing, raising your children or taxes? Your financial contributions to these things will certainly look different after you finalize your divorce. You may want to make sure that you give some of the following thorough consideration.
How much is housing going to cost?
Did you and your soon-to-be ex own a home? If so, you have a couple of options — either sell the home and split the profits, or have one person buy the other out of his or her share. If you plan on buying out your ex’s share of the house, remember that you will have more to deal with than just monthly mortgage payments. These other costs include:
- Property taxes
- Regular upkeep and maintenance
The average adult spends 37% of his or her regular income on housing costs, so keep that in mind, too, if you plan on renting after divorce. You may also face additional costs at the beginning, such as buying new furnishings. Most rentals require security deposits, so you should factor that cost in as well.
What about child support?
Child support is usually based on a pretty straightforward formula in Minnesota. However, this formula does not really take into account all the “extras” that come with raising a child. Raising a child often involves “extra” costs, such as:
- Music classes
- Other extracurriculars
There are also other costs you might not think to discuss because your child has not hit that stage yet. It might not make much sense to talk about potential orthodontic costs when your child is still in the process of losing his or her baby teeth. However, anticipating how you can address these types of future costs will go a long way in making sure that both you and your ex are on the same page.
Watch out for those taxes
Maybe you and your ex are planning to sell the family home, or you are hoping to get a share of stocks during property division that you can sell after your divorce. While there is nothing wrong with either of these plans, you should be aware of potential tax consequences. Capital gains tax can diminish how much you actually make after selling a valuable asset.
Divorce does not have to ruin your finances. You should be prepared to give careful thought and consideration to difficult decisions, especially when it could impact your financial stability. Although you might feel up to this task, it might not hurt to speak with a knowledgeable attorney about potential pitfalls to watch out for.