Few people plan for divorce, but as statistics have shown, nearly half of all marriages will end. Although ending a relationship can be overwhelming, it’s important to take stock of your current situation and plan for the days ahead. Divorce can be expensive, and protecting your bank account and credit score is imperative. As you begin to sort out your finances, don’t:
Proceed without basic information.
The best way to ensure financial stability after your divorce is to begin with a few pieces of important information. Your legal counsel will ask you several questions about your marital assets, including bank accounts, life insurance, real estate, etc. You will also need to provide a list of debts, both joint and separate. It may be overwhelming, but collecting this information is crucial to your case and your future.
Assume you know all the facts.
Marriage is built on trust, but what about divorce? Are you 100 percent sure that you know all the financial facts? If you suspect that your spouse is hiding funds, now is the time to find out. These hidden assets can often be found by locating:
- Past tax returns. Look for any unexplained sources of income.
- Cancelled checks or brokerage accounts
- Unknown savings accounts. Ask your bank for a list of account numbers, allowing you to identify any savings that you were not aware of before.
Even if you are still living together, it is important to begin the separation process now. Start by closing joint accounts and opening new ones in your name only. This will allow you to control and highlight your own spending—especially if your soon-to-be ex is known for being a spendthrift. Joint debts are often split during divorce proceedings. Limit your liability by separating your finances as soon as possible.
Forget to budget.
Your life is about to change in many ways, including the way you budget your money. Readjusting to single life can be difficult, especially if your spouse handled the money in your marriage. Consider brushing up on your lifestyle math before your divorce is final. Read our tips for budgeting and avoiding unnecessary debt.
Be a martyr.
It’s common to feel conflicting emotions during a divorce, but don’t let your ambivalence create deeper financial problems. Depending on your state’s laws and divorce decree, you are likely entitled to many things: half of your spouse’s retirement plan, a split in your assets, the house, the car, etc. If the circumstances surrounding your divorce are tense, it may be tempting to throw up your hands and walk away with nothing. The desire to “get it over with” may be stronger than the desire to protect your future finances. Despite your impulses, it’s important to consider the long-term ramifications of your choices. The bottom line: Financial decisions are best made objectively. Work with a divorce attorney to help you navigate the next stage of your life, and then seek the help of a credit repair advocate to gain a fresh start. Divorce is tough, and protecting your finances will help pave the way for an easier recovery.