Divorce is not cheap in the U.S. What most don’t realize is that the cost for separation and divorce extends beyond your day in court and well into your co-parenting relationship. For those potentially parting ways, there are some important financial pinch points to ponder.
Let’s get right to it and break them down;
- Litigate or Mediate
The national average for legal fees for divorce is a whopping $30k dollars and takes on average 13 months to get divorced.1 Mediation services are generally cheaper but averages are still several thousands of dollars. One of the first and most impactful things you can consider is to discover how you can simplify and save when going through your divorce. A staggering amount of couples go through the process without a lawyer which extends the timeline. Separating and divorcing couples are now discovering they can turn to apps like coParenter to reduce legal fees while keeping the best interest of their kids at the center of it all.
- Home Expenses
For most families that own a home, it is their biggest asset. Divorcing or separating couples will need to factor in that they will be building a ‘HOME 2.0’ for their children with separate expenses (ex. utilities, maintenance, etc.).
- Education and Health
For many families in America, it is not unheard of to pull equity from your house to help pay for college tuition and expenses. Others may start a 529 fund to create a separate nest egg to help meet the rising cost of college tuition. When a couple splits you will need to factor this in when restructuring funds and expenses. If selling the family’s primary home is part of the agreement you may consider using a portion of the proceeds to start a college fund and depending on where you land with the sale of the home it may help offset year one tax implications. Ask your accountant what is best for your situation.
- Other Expenses
After the divorce bills have been paid there are still expenses to be accounted for as you move forward building new lives apart. Here’s a short list of new/expanded expenses that may creep into your life as a co-parent;
- Healthcare – depending on your divorce/separation agreement you may be paying a higher premium for your healthcare package
- Transportation, Gas, and Car Related Expenses – you may find yourself shuttling a bit more with all those kids pickups and drop-offs will add up.
- Babysitting and Childcare – unless you have family members and/or friends nearby to pick up the slack, you will no doubt be needing more of this flying solo
- Home – as you build out your ‘HOME 2.0’ both co-parents will need to make purchases for months and years to come (ex. furniture, clothes, toys, storage, etc.)
- End of child support
Coming up with a post-divorce financial plan is key. For some, a one-time settlement may have to last the rest of their lives while others have until their child turns 18 years old. It is important to come up with a plan to figure out how to cut expenses while making the most of those resources.
Go into divorce with your eyes wide open, recognize the costs above and below the line, and you’ll make smart financial decisions and figure how to proceed.