Divorce has the potential to bring a lot of confusion into your life. So, any time you can take steps to simplify the process, it’s important to do so. This is particularly true when it comes to your finances, as the decisions you make before and during the divorce process will impact you for many years to come.
These are four of the many things you can do to prepare your finances for divorce:
- Create a new budget: Once you’re done reviewing your current budget, create a new one with a focus on your personal income and expenses. Remember, you’ll no longer have access to your spouse’s income or be responsible for their expenses. Your new budget will give you a clear idea of what you can and can’t afford to do in the future.
- Create a property and debt division checklist: This is meant to guide you during the divorce process, as a checklist will help you negotiate in the proper manner while better understanding the impact of divorce on your finances. For example, you need a thorough list of all your separate and joint assets, ranging from your home to your motor vehicles to personal belongings.
- Gather all necessary documentation: This varies from person to person, but start with retirement account statements, bank account statements, credit card statements, loan statements, pay stubs and tax returns. These are the types of documents that are most likely to come into play during your divorce. It’s best to collect these up front as opposed to waiting until they’re required.
- Open individual accounts: As you close joint accounts, you should also open individual accounts. This works in your favor from a budgeting and saving perspective. It also protects against a situation in which your soon-to-be ex-spouse abuses your finances for personal gain.
With divorce, you should never expect everything to go as planned. It’s likely that you’ll run into questions, concerns and challenges, so preparing for everything is a must.
When you take these steps, you’ll better prepare your finances for divorce. And when you do that, you’re more confident in your ability to protect your legal rights and avoid mistakes that could cost you money now and in the future.