Divorce can be a difficult process for anyone, but it can feel especially intimidating for stay-at-home parents. There are important factors for both parties to consider during a divorce in a one-income household, but in this article we will focus on those factors that are particularly relevant for spouses who have not historically contributed to your household’s income. You may want to be prepared to create and follow a budget that works for you, decide whether or not to enter (or re-enter) the workforce, and whether staying in the family home is the best choice for you and your family.
Adjusting to Income Changes
As we discussed in this article, part of the divorce process is separating finances. This process includes both a property settlement and division of income. Division of income may include various forms of support payments. While you may receive spousal support or child support as part of your settlement, either over time or as a lump sum buyout, that amount may not be enough to support your lifestyle and provide for your family in the long run.
The household income that used to provide for one household is now paying for two households post-divorce, which means that there may not be enough income to fully support everyone’s needs. If this is the case, there are a few things to consider to make sure that you and your family are being adequately supported. The first is to develop and stick to a budget that works for your circumstances. If you are uncertain of how to make a budget that works for you, consider working with a financial professional to make sure that you are taking into account all of the necessary factors.
If you find that you are unable to meet your family’s needs with the income that you receive through spousal or child support, you may need to consider going to work part-time or full-time. Recently, remote work has become much more commonplace, so you may be able to find roles that allow you to stay home while earning additional income for your household.
Division of Property
In addition to the division of income, division of assets is also an important piece of your divorce settlement. You will need to take a number of factors into account to determine what is best for you and your children, such as whether or not you will want to stay in the family home.
To help you with these decisions, you may want to read our previous blog posts about keeping the marital home, and the financial considerations that go along with that decision. If you do want to continue to stay at home, consider what you may be giving up in order to keep the home. Are you willing to trade cash, investments or retirement accounts for the ability to stay in the home? Also consider where interest rates are at the time of your negotiations. When you refinance the home after your divorce to move the mortgage into your name only, you may be substantially increasing your monthly mortgage payments simply due to rising rates. Financially, it may or may not be a smart financial decision. While staying in the family home can make certain aspects of your lives easier, it can also create some financial tension. During divorce settlement negotiations there are substantial financial aspects that much be considered before making a rushed decision. It is our job to not only help our clients understand what there financial options are during divorce but also to help clients understand the short-term and long-term ramifications of the options available.
There are a number of other things to consider as a stay-at-home parent, from how to have difficult conversations or set healthy expectations with your children to how you will plan for a healthy financial future. We recognize that it can be difficult to enter into the divorce process as a stay-at-home parent, and we look forward to supporting you as you seek to make the best decisions for you and your family going forward. If you want personalized financial advice during the divorce process, you can reach us at (937) 471-4654 to schedule a complimentary initial consultation.