Managing the Economic Realities of Your Divorce Settlement

Even knowing that your divorce settlement will leave you comfortable, resigning yourself to the fact that your nest egg is finite can cause any newly divorced spouse some concern. You’ve enjoyed a certain lifestyle throughout your married life – perhaps one that wouldn’t have been made possible without your sacrifices. But now that the agreement has been reached and you’re on your own, you may have to make some minor changes for the sake of your financial security.

For many people who are used to a certain lifestyle, there is a fear that their social circle may not understand their new circumstances. After all, if you no longer dine out every night, but all of your friends do, will they stop inviting you to other functions? Will they assume you no longer want to spend time with them? Fortunately, there are ways of cutting back without sending up a flare to your entire social circle that you’re doing so. Even if you have broad financial literacy, you need to set goals for yourself by being honest about your financial needs for the categories below.

Lifestyle

Deciding what’s most important to you at this stage of your life will help guide how to handle your financial decisions. Do you want to slow down to a quiet life away from the busy calendar you kept for so many years? Do you want to travel? Do you want to take up a new hobby and finally have the time to do it? Do you have a health condition that will require special accommodations or costly ongoing treatment?

There are no more rules. You can opt for whatever sort of life will make you happy or give you what you need, and make choices that will allow you to act on it.

Household finances

Depending upon the lifestyle you choose, you may have to make certain financial compromises along the way that will enable you to at least appear to have it all. Some of this might include paring down any unnecessary expenses that no one would notice:

• Changing to less expensive brands of food and household products can save enough over a month to allow for nice meals in high-end restaurants.
• You can find classic looking pieces of furniture in some antique shops for a fraction of what you may have paid for custom made or at high end shops. Or, you can purchase minimalist furniture (to go with your new minimalist brand) and splurge on more expensive statement pieces.
• Purchasing a few well-made pieces of clothing, and paring them with less expensive or non-brand name clothing items, can offer more wardrobe functionality. (Think Sharon Stone pairing a Vera Wang skirt and a shirt from Gap to the Oscars.)
• There is also an entire industry built on lower cost duplicate items for both men and women. Everything from cosmetics and accessories to camping and athletic equipment.

One thing we would suggest is that you consider delaying any new, large financial obligations (such as a home purchase) until the financial issues are settled. We usually tell our clients to rent for a while if they can, rather than take on a mortgage, unless they are certain they have the means to maintain that obligation.

Investing

Find a good financial advisor who understands your goals and can craft a reasonably safe plan to enable you to meet them. You want your money to grow but you don’t want to take any unnecessary risks that can drastically alter your life if things don’t go according to plan. Make sure you understand exactly what is being proposed and the short-term and long-term risks versus rewards so that you can make educated decisions about your money.

Creative ways to cut expenses without truly suffering

If you truly can’t live without certain amenities, such as housekeeping services, you can reduce how often you use them. Tailor your services to cut costs. Housekeepers can come once a week instead of every day, or you can order your food from a local CSA instead of a high-end delivery company.

If you’re in the position of needing to find a new home:

• Look for one that doesn’t require unnecessary upkeep, like a pool that requires regular maintenance, or a front lawn with extensive landscaping needs. Choose a new home that nicely meets your needs but doesn’t significantly exceed them.
• Look at neighborhoods that don’t require monthly homeowners’ association fees.
• Choose homes that require little upkeep. Yes, three-story floor-to-ceiling windows are sumptuous, but they require a lot of cleaning, too.

Being outwardly confident about your choice to downsize or minimize can go a long way in how your social circle will view it if that’s something you have concerns about. There is a significant difference between viewing change as a choice versus a necessity. You may even inspire someone else to make some similar changes.

No matter how much you walk away with, going through a high value divorce can be overwhelming at times. At Epperson Law Group, PLLC, our experienced high net worth divorce professionals understand the fear that comes with the changes you are going through and we will be there each step of the way to ease the strain. Schedule your private consultation with one of our trusted family law attorneys in our Charlotte, Boone or Weddington office by calling 704-321-0031, or by reaching out to us through our contact page.