What is Lifestyle Analysis and Why is it Important?

We each have a unique relationship with money in terms of how we save and how we spend. Habits that began in childhood often carry over into our adult lives with varying degrees of awareness, especially with how we spend money.

A Lifestyle Analysis summarizes spending by category – including housing, groceries, and entertainment – based on the detail contained in monthly statements for each of your spending accounts. This analysis creates a shared knowledge base surrounding a household’s expenditures.

Who Can Benefit from a Lifestyle Analysis?

For divorcing couples, the Lifestyle Analysis provides a snapshot of past and current spending levels and habits. This serves as a starting point for projecting different spending in the future so that you can see the impact on settlement discussions.

For couples needing a pre-nuptial or mid-marriage agreement, the Lifestyle Analysis forms the basis for a facilitated discussion around the financial future you want to create. It helps you define your individual financial philosophies, highlight differences, and come together to set goals and boundaries as a couple. It also helps to set up a framework to encourage and support one another going forward.

How does the Lifestyle Analysis Process Work?

We begin by sitting down with you to identify all household income sources and spending accounts (e.g., checking, money market, credit cards).

  1. For each spending account, you provide 12 months of statements. From those statements, transactions are put into a format which allows them to be sorted and analyzed.
  2. Our staff combines data from the various spending accounts, then sorts and organizes the data into a spreadsheet that shows your historical spending using actual amounts in various spending categories.
  3. Next, we create a report that summarizes spending by category (using categories that correspond to the Illinois Supreme Court Financial Affidavit form). Each report is backed up by the detailed transactions that comprise the numbers. We can also customize categories to correspond to your particular spending patterns.
  4. We then meet with you to review our initial report and refine it as needed. In a divorce, the report is used during settlement discussions to help assess the viability of different settlement options. In creating pre-nuptial or mid-marriage agreements, the report provides input for discussions about how you want to set up household budgets and financial accounts (e.g., savings accounts) given your situation, including individual and joint goals.

How are the Lifestyle Analysis Findings Used?

One of the benefits of Lifestyle Analysis is that it shines a light on expenditures that you may not have been aware of. Many of us know or think we know how we spend our money, but often when we look at those daily stops for coffee, monthly manicures, or a couple of Uber rides around town, we are surprised to realize how those expenditures can add up!

In divorce negotiations, this historical spending serves as a benchmark for the “lifestyle enjoyed during the marriage.” Since the reports reflect actual spending, the other party cannot object that the numbers are “made up.” During negotiations of pre-nuptial or mid-marriage agreements, both parties benefit from having numbers that ground the conversation in reality.

No matter what, knowledge is power, and we’d like to help you reclaim your power.

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