With the prices of the cost of living skyrocketing, including energy, fuel and consumer goods rising quicker than the average wage, many families are now feeling the strain that this is having on their ability to meet their daily living costs.
One area which you may not realise becomes affected is a divorce. If you are currently going through a divorce, or planning one, follow the tips below when reaching financial settlements.
Create a detailed future budget
When you separate from your partner, you will need to think about the resources that you both have available to you, as well as what you will both need to meet your monthly expenses. It’s therefore a good idea to spend some time creating a budget which is suitable for both parties.
This is a crucial part of a divorce, and it needs to be something which not only works now but in the future too. Whilst nobody can predict the future, when creating your budget, consideration for the rising cost of living is a necessity.
Creating a budget like this is also a great way to see if there are any expenses yourself and your partner can agree to cut back on immediately.
You should ideally be taking a pragmatic and non-confrontational approach to negotiations wherever possible. This will often result in both parties arriving at a resolution quicker and more amicably.
The quicker you can agree to decisions and plans, the less money will be spent on the actual divorce process. Alternative dispute resolution such as mediation or arbitration can result in extra costs which could be saved for the future.
Seek legal advice at an early stage
Everyone’s circumstances are different, and what may work for one person may not work for another. It’s a good idea to seek legal advice from local Family Law Solicitors early on in order to discuss the options available to you.
If you don’t get a specialist expert to help you very early on, you may end up wasting your money in the wrong places without getting very far at all in the divorce process.
Consider financial elements to discuss
As the cost of living is going up in just about every sector, the crisis could potentially impact every element of financial remedy. However, some of the areas which would require immediate consideration are:
- Child maintenance. If you and your partner have children together you may be able to work out child maintenance payments using the Child Maintenance Service calculator. This will take into account yourself and your partner’s income, how many children are involved and the number of children living with the paying parent.
- Spousal maintenance. The rate of this maintenance is calculated by evaluating each individual’s income against their needs, such as rent, electricity and standard costs of living.
- Benefits. Depending on your circumstances, you may be able to claim certain supplementary benefits such as Universal Credit. Some councils may offer additional benefits as long as you do not live with anyone else over the age of 18.
It’s important to note that these elements can only be settled if a couple is legally separated.
Review your terms of settlement
After a divorce, it is possible to ask the court to change the existing terms of a financial settlement if they are no longer suitable due to a change in financial circumstances or because of a party’s inability to continue to pay the other. However, there is no guarantee the court will agree to this type of application.
If you were considering putting this type of application forward, both parties would need to put together a budget that clearly shows the increase in living costs that need to be covered, including short-term increases.
Whilst this may help the judge to see the full picture, nobody really knows how costs will rise or which costs may rise the quickest.
Get other support
Besides from a family law solicitor, there are other support services which are available to married couples and civil partnerships. If you cannot afford a divorce at the minute, you could take advice from guidance counsellors and financial specialists who can help you plan your finances.
If you are currently facing financial difficulties during your divorce, consider speaking to a financial advisor, your bank, or charities such as Step Change. These types of charities can offer a range of services to help individuals and divorcing couples get control of their finances by using debt management plans, debt relief orders, equity release and debt arrangement schemes.
Trying to optimise your divorce by looking at external house prices and energy costs can backfire as they are out of any one person’s control. The trick is to get specialist help and focus on what you can control, including reaching a financial agreement which suits both parties and any children involved.