Developing a budget is a critical component of valuing the marital estate (what a couple owns minus what a couple owes = the marital estate) and dissolving the marriage. Both parties and their divorce lawyers should create one (or more) budgets.
A budget should consist of three basic components: historical costs, current costs, and future costs. Historical costs are the costs that were being incurred prior to the separation. Costs in this period are used to anticipate current and future costs. For example, under the assumption that a wife will remain in the family residence after the separation, the utilities costs for her will probably be similar to those incurred before the husband left. These costs can be used to anticipate current costs that will be incurred during the divorce process and, if the wife is going to retain the residence, future costs. Alternatively, costs incurred for one party, but not the other, will be included only in that party’s budget. For example, the husband’s entertainment costs (golf membership, bowling, etc.) would not be included in the wife’s budget.
Drawing these lines often is difficult. Your divorce lawyer can assist in the budget process by applying logic (rather than emotion), eliminating duplicate entries, and clearly delineating between the three time periods. In developing a budget, full disclosure from both parties is the goal. Sound economic decisions cannot be made without complete information. With these principles in mind, you and your divorce lawyer should budget for the following common expenses: food and clothing; housing; transportation; medical expenses; and miscellaneous items.