Why Are Budgets Necessary in Divorce Mediation?

Why Are Budgets Necessary in Divorce Mediation? by Susan Ingram

{3 minutes to read}

Budget preparation, ugh! I know… even in the best of times, this is not exactly an enjoyable task that people look forward to. Yet, it’s something that is absolutely imperative when a couple is separating or divorcing.

When I first meet with couples, I review the main topics that we will be discussing during the mediation process. These include:

  • Budgeting and finances;
  • Equitable distribution of their assets and liabilities;
  • Parenting arrangements, child support and other financial responsibilities for the children; and
  • The possibility of spousal support for the less-monied spouse.

As you can see, most of these decisions have a strong monetary/financial aspect to them. And that’s why it’s essential that couples prepare and review their budgets early in the process. Of course, it’s easier to do that if a couple is already living apart and thus has a clearer sense of what their individual expenses actually are. But even if they have not yet separated their households and finances, they still need to begin the process of projecting what their individual expenses will be.

The budget process ultimately helps to ground the couple in reality. After preparing their budgets, many of my clients realize that they have been spending beyond their means. That’s further exacerbated by the fact that the costs of maintaining two households increases a couple’s expenses 30% to 40% more than their pre-separation household expenses.

While the preparation of accurate budgets is essential in helping the couple cut back on expenses, it also serves several important functions. To give an example — if there is a significant discrepancy in incomes between the parties, the budget can help identify whether the lower-income spouse may need additional financial help. That help may come in a number of ways, based upon the specific circumstances of each couple. For instance:

  • They may agree that additional child support, beyond the statutory amount, will be paid.
  • They may decide that the higher-income spouse will pay for the majority of the “extra expenses” for the children. (Extra expenses are considered separately from child support payments and include costs for unreimbursed medical expenses, child care, tutoring, extracurricular activities, and such.)

Or, to give an example of the reverse situation:

  • If it becomes clear that the non-residential spouse cannot afford to pay the statutory amount of child support, the couple may agree to reduce it to some extent.

Keep in mind that these discussions and negotiations take place in a mediation setting between the individual parties — not as a litigated matter in court before a judge. Mediation provides a unique setting that encourages couples to work together for the benefit of the whole family.

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