As life moves on from the wedding day, budgeting often becomes routine during a marriage. You may have shared financial responsibilities, or left finances up to the more financially savvy person. Perhaps neither of you were ever good at managing your money. That may be the reason you find yourself here, facing divorce.
Everyone knows divorce is expensive. However, it does not have to bankrupt you (and even if it does, it is not the end of the world, we promise!). The following five strategies can help you safeguard your financial future from the overwhelming impact of divorce.
1. Locate your family’s important financial paperwork.
As time goes on, many partners abdicate their shared role in understanding the family’s finances. This is especially true if one partner loves personal finance more or has a better knack for it than the other.
When you decide to get divorced, make sure you obtain a copy of your:
- Latest bank statements
- Credit card statements and balances
- Mortgage documents
- Insurance coverage
- Recent tax returns
- Retirement accounts
- Other financial accounts
If you manage these accounts online, make sure you know the usernames and passwords.
While you must disclose all of this information anyway during divorce, having your own copies ensures that both sides play fair.
2. Close joint accounts and open new,separate ones.
It’s amazing the amount of financial damage someone can do when they are angry or hurt. Running up credit card debt, draining bank accounts, locking spouses out of joint financial investment accounts – these are all issues that could happen if your divorce becomes highly contested.
Ideally, the two of you can civilly resolve your issues without resorting to these tactics. It is still a good idea to open your own checking account and a credit card in your own name once you have officially filed for divorce. Your credit score will likely take a hit given that established accounts are likely to be closed, so opening new accounts now can start rebuilding your credit right away.
3. Start exploring your health coverage options now.
In many families, one person’s health coverage covers the entire family. When you get divorced, you may need to find your own health insurance. Talk with your HR department about options through your own workplace. You can also look for coverage from the Maine Bureau of Insurance. If you have children, you will need to discuss who will claim them as dependents and budget for those costs.
4. Create your own budget and stick to it.
You will likely be moving from a dual-income budget to a single income-based budget. This might be exactly the type of freedom you want from divorce. However, it will probably require you to shift your financial priorities temporarily until you get used to living on one income. If you have not traditionally been the one to manage finances, now is the time to learn.
5. Don’t be afraid to seek professional advice.
If you are new to budgeting and personal finance, there are countless resources out there to help you. However, not all of them are reputable. Be wary of unsolicited advice from well-meaning friends, coworkers and family members. You do not want to jeopardize your future by making unwise or reckless decisions. Working with your divorce lawyer, a professional financial planner or a certified public accountant can put you on the right financial path forward.