Navigating the emotional shoals of divorce is never easy. Add in the problems of untangling shared finances and it gets that much tougher. A few simple tips can help you organize your finances before and after the dissolution of your marriage.
There’s a lot to think about beyond dividing the belongings. Who will make sure bills are paid before the divorce is final? Is there a plan in place for paying for college for your children? Have you made sure your retirement is funded?
If you are contemplating divorce you’ll obviously hire an attorney to guide you through the legal land mines, but many forget that hiring a financial advisor to guide you through the financial land mines is also important. While these 10 critical tips can get you started down the right road, after the legal process has played out, one could be left with long-term financial problems if they don’t get more detailed assistance. The Financial Planning Association has resources to help you through the wrenching divorce process.
AdvisorOne has complied the Top 10 Critical Financial Tips During Divorce:
1. Devise a New Budget
With your household income taking a hit, you need to sit down and make sure you can cover your monthly expenses. In addition to ensuring you live within your new means, it’s important to establish a cash emergency fund. Expenses for attorneys and other costs can mount. And don’t forget to include savings for retirement in any plan you devise.
2. Monitor Your Credit Report
Before the divorce is complete, monitor your credit rating to make sure you maintain a good rating. Remember that even debts normally paid by your spouse can reflect on your credit score.
3. Close Joint Accounts
Make sure that all joint credit cards, bank accounts and other shared accounts are closed, paid off or put in one person’s name or the other. Use your credit report to make sure you don’t forget any accounts. This will help protect your credit score from delinquent payments on the part of your former spouse.
4. Open Accounts in Your Own Name
After you close accounts that carry the names of both you and your spouse, you’ll want to establish credit on your own. Apply for credit cards and open bank accounts in your own name. Be sure to use a different bank than you used for the joint accounts.
5. Estimate Your Worth