Divorce can have a significant impact on your finances. Even with experienced legal guidance, the cost of living on your own as opposed to pooling your resources with your spouse for the cost of your home and household expenses requires some recalibration of your finances.
So how do you get your financial life on track after a divorce? Following are some important steps to take:
— Get a team in place. Besides your attorney, you may benefit from getting financial and tax advisors. You may not want to rely on people who provided financial and tax guidance to both you and your spouse as a couple. Make sure you have people with no conflict of interest who are there to look after you.
— Whether you seek the help of a financial advisor or not, you need to take an inventory of your income, assets, expenses and debts. Fortunately, there are a number of apps out there like Mint.com that can guide you through this process if you’re doing it on your own. This can help you determine exactly what you’re spending on rent, mortgage payments, utilities and other items that you previously shared with your spouse and let you budget accordingly.– Get your bank accounts and credit cards set up correctly. Get your attorney’s advice before you make any changes in the ownership of the accounts you currently have with your spouse. The same is true for retirement accounts and investments. It’s important to have assets in your own name, but you don’t want to go about it the wrong way and risk legal issues.– Check your credit report. Your good credit is going to be more important than ever since you’ll likely need to make some large purchases in your own name. Clear up any issues that could drag down your credit score.
When you’ve taken care of these immediate financial issues, you should move on to making a financial plan for the next few years. A lot will be changing, but it’s essential to have financial goals for you and your children. It can help make it easier to move on with your life and look forward to the future.
Source: MarketWatch, “8 steps to rebuild your financial life after divorce,” Neal Frankle, Credit.com, April 26, 2016