Going through a divorce can be emotionally draining; however, you cannot allow the emotional toll that your situation is taking to create a permission structure in which you ignore your financial situation during and after the process. Properly preparing your finances can help you navigate this challenging time more efficiently and confidently.
The following are some essential tips to consider when preparing your finances for divorce.
Organize your financial documents
Take time to get your financial documents together. This includes everything related to your money. Organize them neatly to provide a clear picture of your financial situation.
Know all your assets and liabilities (debts)
List all your assets, including real estate, vehicles, investments, retirement accounts and valuable possessions. Also, list your debts, such as mortgages, loans, credit card balances and any outstanding bills. Understanding your financial standing will help during negotiations.
Establish your individual accounts
Open individual bank accounts and credit cards in your name to separate your finances from your spouse’s. This step ensures that you have access to funds and credit independently.
Review your budget
Assess your current expenses and create a realistic budget based on your individual income and financial needs. You may need to adjust how you spend and save to cover your debts post-divorce.
Plan for alimony and child support
If you have children or anticipate paying or receiving alimony, understand the laws regarding child support and spousal support. Prepare a budget that accounts for these expenses or income streams.
Protect your credit
Get a copy of your credit report. Make sure to check it regularly to find errors or unauthorized activity. You’ll also need to protect your credit rating by making payments on time and closing any joint accounts.
You cannot wait until after your divorce to protect your finances. Make changes now to better ensure that you are prepared for the future.