Your Post-Divorce Budget: Items You Might Not Have Correctly Identified

Once you've decided that divorce is the only option for your current situation, the considerations quickly turn to finances. From retirement portfolios to property assets, the messiest part of the divorce is often the allocation of the couple's financial resources. When you consider that the quality of your life depends on your ability to sustain it financially, it's easy to see why so much time and effort is spent on money.

However, if you've been living in a family setting, it's often difficult to know what your expenses will look like after the split. As a result, you might think your financial agreement is a good one, only to find out the hard way that it isn't. Looking at your post-divorce budget correctly before you agree to financial terms will help you avoid learning this lesson the hard way.

Critical Budget Item #1--Housing

If you currently live in a home and intend to remain there after your split, your cost for housing is relatively simple to calculate. On the other hand, if you're liquidating your family home or your spouse is given rights to the house, you'll need to find a place to live. Since this cost will likely make up the largest portion of your monthly expenses, you should figure out exactly what type of residence you'll need--and how much it'll cost in your area.

To give you an estimate, the average U.S. citizen must make approximately $19.35 an hour to afford the rent on a two-bedroom apartment. According to this conversion chart, that would mean an average salary of approximately $40,000 each year. If you're currently employed, it's simple enough to know whether your finances and your divorce agreement will allow you to make this transition. If the numbers don't add up, or if you've yet to secure employment, you might want to negotiate further with that in mind.

Critical Budget Item #2--Health Insurance

This is particularly important for anyone who is not employed or who is a part-time employee in their current family structure. If you're used to getting your health coverage under a family plan offered through an employer, you could need to secure individual or adult/child insurance. The cost could come as a shock for people not used to budgeting for it.

The average cost of single person health insurance is approximately $256 each month--though this figure does vary by age and location. For family coverage, the rate skyrockets to over $1,000 every month. It makes sense, then, to get a quote that relates to your specific circumstances after the divorce and add that figure into your monthly needs.

Critical Budget Item #3--Investments

While the first two budget items are clear necessities, investments are often overlooked in a budget. This is truly unfortunate--retirements and college educations are still important items that require planning. In fact, since you'll be living as a single adult, it's even more critical that you set up an investment schedule and stick to it than it might have been when you were married.

For your retirement, it's important to understand that you likely won't be able to contribute as much to your fund as you would have in the past. However, make sure you understand the divorce's implications for shared retirement assets such as pensions and IRAs. Your investment strategy should change depending on how those resources are allocated.

With college planning, you'll need to work with your ex-spouse as a team. As with all things in a divorce, it's important that the needs of your children come first. Make sure that a solid, sustainable plan is established with both parties contributing to the educational future of all your children.

If you haven't considered these items while you've gone through the settlement process, you should schedule a consultation with your divorce attorney and review them. While it's likely that your legal counsel has already brought these issues to light, you won't truly know what your post-divorce life looks like until you've gone over these budget items at length.