Getting a Divorce? Here’s the Financial Advice You Need to Know

June 16, 2019

A divorce is always a troubling period of time for anyone. Naturally, this is a stressful period of time. For many, it could be the most stressful period of their lives. Several studies have actually demonstrated how a divorce could have a negative impact on the immune system. The more stressful the divorce process, the more likely you are to suffer from mental and physiological illnesses. And there are several major stressors associated with divorce. These include the idea of starting your life over, feelings of failure, losing a familiar lifestyle, and battling feelings of loneliness.

Getting a Divorce? Here’s the Financial Advice You Need to Know.

And one of the biggest stressors of all is money. Not only will you be facey pricey attorney bills, but you’ll also have to think about how to manage your life and home with a cut in income. While emotional struggles are a normal part of the recovery process, there are some financial tips you can follow to make your divorce proceeding a little more smooth. Here’s what you should know:

Close Joint Credit Accounts

As soon as it becomes clear you’re getting a divorce, both parties should amicably decide to close any existing joint accounts and open separate accounts. Divorce proceedings are already tricky enough as it is, without continuing to accrue joint money while the divorce is underway. As you rack up joint debt, you could even unintentionally hurt your credit scores and report, which would make the divorce process even more complicated.

Create a Budget

Transitioning from a two-income household to a single-income household is never easy. Now is a great time to start making a budget for daily and weekly expenses. Outline everything you’re spending money on, including all bills—from your mortgage to your car payments to your cable and cell phone bill. Then, factor in living expenses. How much are you spending on groceries per week? What are your long-term expenses (such as tuition)? As you think about each of these things, start writing it down to commit it to memory. Then, enlist the aid of a solid financial management application to help you manage your budget in real-time.

Talk to a Financial Planner

A financial planner can not only help you build a budget, but can walk you through the entire process from a financial perspective. “When you’re in the middle of a divorce, you can easily become lost in the details and quickly become confused,” says Griffin Financial, an agency that specializes in financial divorce planning. “An advisor will help keep you aware of the bigger picture so that you don’t make crucial mistakes as you enter this new phases in your life.”

Unlike divorce attorneys, financial advisors aren’t just looking at what’s happening during the divorce proceedings: they’re analyzing your best interests, and aligning for a better financial future, long after the divorce has been finalized. You should be crystal clear on every single asset that you have to ensure optimum comfortability.

Work On Rebuilding Your Credit

During the divorce process, begin by changing your official marital status of your post office records, property titles, professional licenses, health insurance, utilities, and any other relevant places. This will not only help you begin the official separation quicker, but can be a strong emotional factor, too. If you wait too long to complete these tasks, you could be getting an influx of bills and announcements addressed to your married name, which could prevent you from moving on the way you’d hoped.

It’s not uncommon for one or both parties to emerge from a divorce with a bit of damaged credit, so it’s important to start thinking about these things sooner rather than later. Start by analyzing your credit report from all three bureaus to gain valuable insight about what’s affecting your credit at this moment. This will help you prioritize your bills. If necessary, you may need to seek credit counseling.

Change Beneficiaries

Changing your beneficiaries may be a difficult step, but it’s a necessary one. Yet, many people don’t consider this a priority. This includes your 401(k), living will, trust, life insurance, IRA, and any other assets. Otherwise, in the event of an unfortunate death, your ex-spouse could end up with everything. You should talk to your lawyer about which designations you can change now, and which will have to wait until the divorce has been finalized.