Divorce is hard enough. Add in a financial emergency, and it might feel like your personal version of “Mission Impossible”.
No, this isn’t a perfect storm that only happens to those who are particularly unlucky. Financial emergencies in the midst of a divorce are more common than you might imagine. Life doesn’t press “pause” just because you are dealing with a divorce! Job loss, medical expenses, unexpected home repairs, a car breaking down, needing money for a plane ticket to move your aging parent into assisted living — how do you make ends meet while keeping your divorce process on track?
Let’s get the obvious thing out of the way first: it isn’t easy.
The good news is that a collaborative divorce process is well-suited to help you get the resources you need to deal with the emergency. Here’s how.
Step 1: Get a grasp on your “normal” finances first.
That bit of homework that your neutral financial planner has assigned to you about building a detailed budget? Don’t procrastinate on that. One of the top regrets for people who have been through a divorce is not getting a firm handle on the family finances sooner. In your case, the best time to start is right now.
So, build that budget. Your neutral financial planner is there to help, whether by providing a template as your starting point, answering specific questions, or highlighting expense categories you may have overlooked.
An important side benefit of having a budget is that it can become your measuring stick for what is and isn’t a financial emergency. Some things may feel like an emergency when they are just a normal part of living, and it can be hard to tell the difference when you are under stress.
Which brings us to the next point.
Step 2: Lean on your collaborative divorce team!
You chose collaborative divorce in part because it gave you access to a team of experts. Every professional around the table has seen some version of the emergency you are dealing with right now, whether in personal life or with other clients. So, work with your team.
Communication is key, especially if you have to act quickly. Perhaps you must travel to help move your parent into an assisted living facility. The attorneys, your neutral financial planner, and your spouse will all talk with you to explore options. How will the family pay for the flights and take care of the kids while you are away? Can we delay the next meeting to give you time to handle what’s urgent?
Or maybe you’ve recently lost your job. The team can help you map out your next steps, offer job search advice, refer you to someone who may be able to help, etc.
Or maybe your car died, and you need to buy or lease another one in order to get yourself to work and the kids to school. The collaborative team will treat this as a family matter, with a slight twist. They must find a solution that works today and accounts for the fact that there will be two separate households in the near future. In other words, the short-term “fix” must be sustainable post-divorce. Was a new car for you in the budget already, making this a simple matter of accelerating cash flows? If not, how much of a car payment can you afford? Can we tweak the asset split to allow you a little more cash upfront in exchange for a little less of another asset later?
Don’t let a cash emergency compromise your divorce process!
The bottom line is that unexpected things happen. The best course of action is to have sufficient cash reserves to absorb and buffer those emergency expenses.
So, get to work on that budget sooner rather than later. Know what resources you have. Yes, even if those resources aren’t enough. Uncomfortable facts are always more useful than comforting guesses!
Finally, lean on your collaborative team. We are there to help you solve whatever puzzles come up in a way that checks the necessary boxes right now — and builds a solid footing for your financial future as head of your own household.