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  • Writer's pictureEva DiGiammarino

Save Money in Your Divorce: Budget Throughout Negotiations


Divorce is undeniably one of life's most emotionally taxing experiences, often leaving individuals overwhelmed and uncertain about their financial future going forward. As a divorce lawyer and mediator for over 6 years, I have noticed that when parties to a divorce are unaware of their financial future, they can become anxious and this anxiety manifests in taking an unreasonable position in negotiations.


For example, someone who is afraid they wont be able to cover their bills going forward, may make extreme demands in negotiations such as, an exorbitant amount of spousal support or may refuse to pay support all together. Taking extreme positions in an negotiation can lead to increased conflict, wasted time and high legal fees. So how can one avoid this? - by preparing current and future budgets!


Understanding the Role of Budgeting

Budgeting is not merely about balancing numbers; it's about gaining insights into your financial reality and making informed decisions. A well-prepared budget equips you with knowledge—an essential asset in any negotiation. By having a clear picture of your income, expenses, assets, and debts, you can advocate for your best interests confidently. Rather than relying solely on assumptions or vague estimations, you'll enter negotiations armed with facts and figures that substantiate your claims. This positions you as a proactive and well-informed participant in the process.


How to Budget for An Unknown Future?

It can be challenging to budget for the future when you don't have a complete picture of all your expenses. However, with some strategic approaches and thoughtful considerations, you can still create a budget that provides a solid foundation for your negotiations. Here's how:


1. Start with What You Know:

Begin by listing all your known current expenses. These might include regular bills like mortgage/rent, utilities, insurance, and groceries. While these may not encompass every expense, they give you a starting point to work from.


2. Estimate Variable & Non-Necessary Expenses:

Variable expenses, such as entertainment, dining out, and personal care, can fluctuate. Estimate these costs based on your past spending patterns, but also be ready to adjust them as needed. Prepare "best" and "worst" case scenarios for these expenses as many of them can represent wants over needs.


3. Consider Multiple Different Arrangements

Don't pigeon hole your future; consider real-estate expenses in different neighbourhoods, and compare the costs for different home ownership options including rent, lease and ownership.


4. Consult Professionals:

During divorce, hiring professionals such as a financial advisor or a divorce attorney can be incredibly helpful. They have experience dealing with divorcing individuals and can provide insights into common expenses that arise during and after the process.


5. Create a Range:

When you don't have a clear picture of all expenses, it's a good idea to create a budget range. List your known fixed expenses and then create a high and low estimate for variable and uncertain expenses. This provides flexibility in your planning and negotiations.


6. Prioritize Necessities:

Focus on the essentials first. Prioritize needs like housing, utilities, groceries, and healthcare. This helps ensure that the most crucial aspects of your budget are well-covered, even if you need to make adjustments later.


7. Be Open to Adjustments:

Recognize that your budget will evolve over time. As you gather more information about your expenses and your financial situation, be open to making adjustments to your budget. This flexibility will help you adapt as needed.


8. Document as You Go:

Keep track of expenses as they come in, even if they weren't initially accounted for. This not only helps you build a more accurate budget but also serves as documentation for your negotiations.


9. Set Aside a Contingency Fund:

In situations where expenses are uncertain, having a contingency fund can be invaluable. This buffer can cover unexpected costs that may arise during and after divorce negotiations. Planning for a 6 month reserve of your fixed costs will provide you with a great sense of security in the future.


Conclusion

Budgeting is an essential tool in the arsenal of anyone navigating divorce negotiations. It transforms uncertainty into empowerment, anxiety into clarity, and emotions into informed decisions. By creating a solid budget before entering negotiations, you're not just safeguarding your financial future—you're enhancing your mindset and strengthening your position at the negotiation table. Remember, divorce is a pivotal moment, and approaching it with a strategic mindset can make all the difference in securing the future you deserve.

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