As you ponder the impact of divorce on your life, don’t lose sight of the steps you can take to protect your finances during the process and after it reaches its completion. The steps you take up front allow you to avoid additional problems in the future.
Here are five tips to help protect your finances during this difficult time:
- Get help: Don’t assume you know everything, as there are people who can help you plan for the financial impact of divorce. For example, your tax professional can discuss the impact of divorce on your tax situation. This can save you money now and in the future.
- Make note of your assets and debts: You don’t want to go into the divorce process until you make a list of your assets and debts, as these will be a big part of your negotiation. Note: Don’t hide anything from the court.
- Collect financial records: This includes things such as bank statements, retirement account statements, pay stubs, tax returns and insurance policy documents. It’s better to have too many records on your side than not enough.
- Open accounts in your own name: You may have used joint accounts in the past, but this is no longer something you want to do. Open an individual bank account, retirement account and credit card.
- Create a budget: This process will give you a clear idea of your income and expenses, along with any changes you must make in the future to make ends meet. Your financial situation is likely to change in many ways after divorce, so you need a budget to keep you on track.
If you run into any trouble along the way, stop what you are doing to find a solution. Assuming that something will get better on its own is a big mistake, as the divorce process may actually make it worse.
Your marriage will be in the past soon enough, so every financial decision you make should be in your best interest.
As you move through mediation and negotiate the many financial details of your divorce agreement, make sure you understand the impact of every decision. The steps you take during your divorce will eventually come into play in the future, so you don’t want to make any mistakes.