A divorce can severely impact your finances in many ways, both immediately and after the final court decree. In particular, the complexities of property division have the potential to take a toll, as do support matters and simply the cost of getting divorced.
Despite the obstacles, it is important not to get too frustrated or overwhelmed. You can work toward successfully managing your finances during and after a divorce by solidly planning from the start.
The following steps can help you on your journey to meet the goal of post-divorce financial success.
- Carefully select your attorney - Choose a divorce lawyer who is knowledgeable about financial matters and skilled with divorce negotiations.
- Inventory your assets and liabilities - Gather documents for all assets, liabilities, income and expenses, including bank account statements, retirement information and real estate documents. You will need to understand these documents to negotiate a favorable property settlement.
- Consider the tax ramifications - Some property will include taxable gains or will be subject to future income taxes, while others are tax-free. Keep this in mind during property division.
- Check your credit - Check at least one credit report for debts or liens you may not know about. If possible, request a copy of your spouse's credit report as well.
- Update your beneficiaries - Review retirement plans, insurance accounts and estate planning documents and change your intended beneficiaries as needed.
- Safeguard future child support and alimony - If necessary, try to ensure that support payments will continue if your ex-spouse dies or becomes disabled. This may require you a new insurance policy.
- Adjust for your reduced household income - Know your cash flow, live within manage credit card debt and your means.
- Learn to manage your budget - Understand your monthly bills and pay them on time. Try creating a budget to help balance income with expenses.