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What can you do to be financially prepared for divorce?

On Behalf of | Jun 5, 2024 | Family Law |

When you and your spouse decide to end your marriage, you may have many concerns about the future. One of these concerns is likely your finances and how you will maintain your current standard of living.

Divorce can be a challenging and emotional time, and it can impact your financial situation. Preparing financially for divorce is important to ensure stability and security during and after the process.

Gather financial documents

Start by gathering all essential financial documents. These include bank statements, tax returns, pay stubs, mortgage documents, investment accounts, retirement account statements and credit card statements.

Create a budget

Develop a budget to understand your current expenses and how they might change after the divorce. List all your monthly income and expenses, including housing, utilities, groceries, transportation and any debts. This budget will help you understand your financial needs and make adjustments as necessary.

Track your spending

Monitor your spending habits to identify areas where you can cut costs. Keep a detailed record of your expenses to understand where your money goes each month. This information will be helpful in adjusting to a new financial reality and creating a post-divorce budget.

Separate joint accounts

Consider separating joint accounts to protect your finances during the divorce process. Open individual bank accounts and start directing your income into them. Close joint credit card accounts or have your name removed from them to avoid becoming responsible for any new debt incurred by your spouse.

Evaluate assets and debts

Make a detailed list of all assets and debts. This includes real estate, vehicles, personal property, investments, loans and credit card balances. Understanding your net worth can help with the fair and equitable division of assets and debts during the divorce.

Consider seeking financial advice to help navigate the complexities of divorce. A financial advisor can help you create a comprehensive plan that addresses your unique situation, helping you make informed decisions about your financial future.