Cash Flow - Is Support Needed?
Once you have a budget and income, the next step is to determine if you need support. Learn about this fundamental questions and types of support to consider.
You are trying to figure out how to take your one household from during the marriage and split it into two financially independent households. Once you have a clear sense on your budget and your income, then you need to determine if support is needed. Ultimately, you are trying to answer the question: Can you each support yourselves moving forward or do one of you need support from the other to make your cash flow work? Understanding whether financial support is necessary is the next crucial step.
Ways to Think About the Analysis
Imagine your income and expenses as two sides of a scale. On one side, you carefully calculate your net income, considering every penny earned after deductions. On the other side, you compile a detailed budget, accounting for all foreseeable expenses post-divorce. As you compare the two, you're hoping your income outweighs your expenses. Then you will have enough income to meet your needs. But what if it doesn't? What if there is a gap between your budgeted need and your income?
There are two clear ways to address a gap between income and expenses – earn more or spend less. You can start by reviewing your budget and see if there are reasonable areas to cut your expenses. Then ask yourself if there is a reasonable way to earn more income? If you can adjust your income or expenses to a point you can make things work, then no support is needed. If neither of these options can make your cash flow work, then you need to think about support.
Remember it's not just about crunching numbers; it's about understanding your needs and making decisions in your own best interest. Whether it's spousal maintenance/support or child support, you should move through the process in a manner to reach resolutions that provide you financial security moving forward. Armed with insights and resources, you're ready to take on the challenge, ensuring that your financial well-being remains a priority amidst the challenges of divorce.
Types of Support
Depending on the jurisdiction, if support is needed, support typically includes one or more of the following types:
- Spousal Support/Alimony/Spousal Maintenance
- Child Support
- Direct Payment of Expenses
Let’s walk through each of these in more detail now.
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