It can be difficult to pivot your focus to your finances when you’re dealing with the emotional impact of a divorce. No one wants to have to think about budgets during a challenging time like this. However, it’s vital to prepare yourself for the financial challenges that might appear in your future. If you financially prepare for a divorce, you can avoid further conflicts and ease stress. That’s why we’ve created a list of ten financial tips that can help you feel more prepared moving forward. This list of financial advice is important for anyone facing significant or even minor changes in their financial life after a divorce.
Gather Important Documents
If you and your spouse shared bank accounts, credit cards, assets, or property, it’s important to start gathering all of those documents. This is an essential first step in order to financially prepare for a divorce. These records will help to paint of picture of your financial history and your net income. It can be a long and tiring process to locate and collect these types of documents, so it’s recommended to start early. You’ll want to start collecting checking and savings statements, mortgage statements, loans, credit card statements, and tax returns.
Know Your Past Budget
Experts will strongly advise you to make a monthly budget of how you lived prior to the divorce. This figure will come in handy when it comes to possibly alimony payments or child support. It’s important to know exactly how much you normally spent on things like food, transportation, clothing, or recreational activities per month.
Know Your Future Budget
It’s just as important to be aware of your future budget as it is your past budget. To financially prepare for a divorce, you need to identify any new expenses that could appear after the divorce is finalized. New tax hikes, schools for the children, or a rise in HOA fees could significantly change the way you live.
Having a sufficient savings account is always recommended. Saving after a divorce is absolutely essential. Until you hear the final judgment from the courts, you don’t know what kind of financial state you’ll be left in. Having a nest egg can help to ease stress and give you some peace of mind.
Remember to Consider Your Retirement
Even younger couples that are divorcing should consider their retirement. If you don’t have a retirement plan or pension, but your spouse does, you could be eligible to receive half of that fund. Remember to talk to your divorce lawyer or financial advisor about what kind of paperwork needs to be completed to split retirement funds.
Don’t Commit to Making Important Financial Decisions
It could also be tempting to change your will, remove beneficiaries, or turn your estate planning upside down. Divorce lawyers and financial advisors will advise you to refrain from making these changes. Judges don’t commonly see it as a fair move and you could lose certain assets to your ex if you act out of spite. It’s best to wait to divide these items together with your attorneys.
Don’t Make Big Purchases
It might be easy to fall into the trap of retail therapy after a divorce. You may be tempted to buy a new car or move into a new condo. However, the financial experts deem this a bad idea. Don’t start spending money you don’t have yet. Hold off on big purchases until you have a final hearing.
Anticipate Resistance from Your Ex
It’s also strongly advised to be ready with supporting arguments, receipts, or other documentation to prove your points. Even amicable divorces can get heated when it comes to separating assets and dividing finances. Be ready to defend yourself.
Respectfully Ignore Your Divorced Friend’s Financial Tips
Let’s face it, divorce is quite common. That means that any friends who have been through a divorce will want to share their story. While it can be helpful to have an empathetic support system, it’s not always helpful when it comes to your finances. Every single person goes through divorce in different ways. No two divorces are exactly the same. Be sure that you’re only taking financial advice from your divorce lawyer or financial advisor.
Have the Right Attorney to Help You Financially Prepare for a Divorce
Of course, don’t ever face financial struggles or questions alone. Remember to ask for help if you’re unsure about certain documents, funds, or taxes. Finances can suddenly turn complicated once a divorce is on the horizon. An experienced divorce lawyer can give you more information on how to financially prepare for a divorce. They can assist you in estate planning, budgeting, and a number of other financial moves. Contact a divorce lawyer today to learn more about your financial future!