Divorces can be messy and complicated situations for couples. The thought of separating everything between two people is a huge task, and it’s essential that you stay on top of your finances. These are uncharted waters for you, and there’s a lot that goes into these separations.
We hope these tips will help you stay on track.
1. Ask for Help
Managing your finances is not something you should try to do alone, as it can be easy to make a mistake. It can be very beneficial to leave the amicable separation of your life to a professional, so consider speaking to a divorce mediation attorney. Hiring an attorney can take the stress out of working with your soon-to-be ex-spouse to divide your marital estate. They can help you settle alimony agreements and child support payments.
In addition, a lawyer can help you navigate the complexities of contested and uncontested divorces. Disagreements can happen easily in a divorce, so consider leaving it to a professional. In the end, a professional can bring an unbias approach to dividing your finances. A financial advisor can also help you post-divorce
2. Handle your Debts
When you’re married, your debts are considered to be shared amongst you and your partner. Part of the process is going through a divorce is managing who incurs these debts. In less amicable divorces, debts are split in court. They are generally split evenly when possible, but in some cases, they will be unequal depending on how other assets and property are divided to make the divorce more equal.
3. Update and Pay off your Joint Accounts
It’s important to stop using joining credit accounts. By using the card and generating debt, you can potentially affect both of your credit scores. When you divorce, some people may take a hit on their credit score. It can be worthwhile to open a new bank account and start working toward bolstering your credit again.
As for joint bank accounts, in most scenarios, it makes the most sense to close these accounts. The bank can put a hold on your account until you and your spouse can set aside the time to split the funds and close your account. Banks are experienced in working with divorces, so this sort of call to your trusted bank is quite common. Taking the money you split with your spouse to your individual account will be one of the first steps toward managing your finances in your divorce.
No matter which side of the divorce you’re on, your financial situation will change. Keep track of all of your expenses, and look into job opportunities if you have been out of the workforce. Food, rent, car payments, and insurance should all be considered as they will all become your single responsibility.
It’s essential to be realistic about your budget at the start and slowly make changes from there. Start with a historical approach to understanding where your spending habits are. What are your average monthly rent or mortgage payments? How much will you need for transportation? How will children affect your budget? We recommend downsizing from the large house to something more modest for a single income, but we cover that in more detail later.
In conjunction with budgeting, we recommend that you open a savings account (if you don’t already have one) and start saving as soon as possible. Life can be unpredictable, so you never know when expensive car repairs, medical bills, or other expenses will arise. In addition, it will be good for you to save for more personal goals, like holiday gifts and vacations. Just because your marriage is over doesn’t mean your life has to as well.
This subject can be very complicated, and in most states, retirement is considered to be a marital asset. Retirement funds will more than likely be split up after the divorce. Depending on the plan you have from your employer, there are different rules for separating the accounts. We recommend that you leave retirement asset separation to the professionals, as they will attain the most amicable and legal solution. In the end, be sure to keep track of this aspect, though, and be sure to continue contributing to your retirement once everything is settled.
Even though one of the most contested items in a divorce is a shared home, consider the implications of affording that home on a single income. Living within your means and living in a smaller house or apartment can go a long way in saving you some extra money. In addition, if you decide to downsize to an apartment, you can justify selling off some more oversized, bulkier furniture or unnecessary outdoor furniture. It may not seem like much, but it will go a long way in maintaining some financial stability post-divorce.
A prenuptial agreement is a legal contract that details how your finances and assets are separated in the event of a divorce. Prenups are written and agreed to beforehand. If you’re lucky enough to have a prenup, it will make the divorce process seamless. They’re designed to be fair and equal for both partners.
Consider taking the time to look over your prenup and see how things are being separated, as it’ll be essential to see how your financial situation will change. While this doesn’t help people already going through a divorce, if you have one or are thinking of getting one prior to being married, it can go a long way in settling divorces in the future.
No matter where you are in the divorce process, these tips can save you some stress moving on from a marriage. Divorces are tricky, and hopefully, these tips will help you know when you need help from a professional.