Divorce is difficult. The last thing you need during such an emotional life transition is to worry about your finances.
There will be some financial decisions you will need to make during the divorce process. Legal decisions, like division of property, will occur during the actual proceedings. But there are steps you can take in the meantime to handle your everyday finances.
Here are some things you should talk about with a financial professional and your spouse.
Step #1: Decide If You Still Need Joint Accounts and Assets
Even during a divorce, joint accounts and assets belong to both of you. So a helpful first step is to close any unnecessary joint accounts and decide what your plan is for joint assets. This could be checking accounts, mortgages, credit cards or any other account type.
Any joint accounts that remain open are vulnerable to risk. One spouse could move money to a personal account without telling the other party. Or someone could run up credit card charges.
If you decide to keep any joint financial items, make a plan together for how to use them. Make sure that you each regularly monitor the accounts.
If you close all your joint accounts and assets, talk about how you will handle any mutual day to day finances. If you have children to care for, they will be the top financial priority.
Step #2: Figure Out Your Budget
While you are going through the divorce process, your usual household budget will likely need some adjusting. As you transition into being a single income household, how you divide everyday expenses might need to change a bit.
Make sure your budget includes necessary divorce-related expenses like lawyers or moving costs. Also keep in mind that some of your bills may change as you update household expenses.
If you have children, you may need to talk to your spouse about any child-related budgetary needs. This conversation should include longer-term goals like getting a car or paying for college.
Step #3: Update Planning Documents and Insurance Policies
If your will, retirement accounts, life insurance or any other accounts list your spouse as the beneficiary, you should update them. You may also have to update non-financial documents like emergency contact forms at your healthcare provider’s office.
You should also update your insurance policies as needed. Pay attention to your insurance carrier’s life change policies. Sometimes you might have to wait until the divorce is final. There may also be a specific time requirement for making changes, so stay on top of those deadlines.
Step #4: Pay Attention to Your Credit
It’s always a good idea to monitor your credit report, especially during a life transition like a divorce. If you see anything unusual, report it right away.
You also may need to build your personal credit. Sometimes couples have most of their major purchases in one person’s name, so only that person benefits from building credit over time. If you haven’t established much credit over the years, you may want to get a credit card and use it to start responsibly building your credit.
Step #5: Get Help When You Need It
This may be the last step, but it is a big one. Don’t be afraid to seek out help when you need it. Your personal support system can be a major help throughout the entire process.
Even your financial institution can be a valuable resource. You can reduce a ton of stress as you get your finances under control. It’s one less thing for you to worry about.
See if your financial institution offers any free financial counseling. These confidential counseling services can help you develop a plan to manage debt and work toward your financial goals.