Divorce is hard, messy and emotional; it is also financial.  As if getting out of a relationship is not complicated enough, dealing with the financial aspect of divorce is challenging too.  If you are changing your relationships status, consider these steps to be prepared financially.

Take A Financial Inventory

You first need to know where you are to know where you are going.  Make a list of all bank accounts, credit cards accounts, retirement accounts, mortgages, student loans and anything else financially related.  Consider creating a full net worth worksheet to find out exactly where you are, find an example here.

This inventory does not always shake out to a 50/50 split or indicate that each person takes what is theirs, but identifies assets and loans that are “his” and “hers.”  For example, you have a 401(k) from your job, he has a student loan, together you both purchased the house.  Make notes for your attorney and financial advisor on ownership so they can begin to develop tactics.  You do not want to be left holding the note on his beloved Harley while he rides around without a helmet.

Check out a list of documents to gather from the Institute for Divorce Financial Analyst.

Focus on the Future

Start imagining and building your life around your future income.  Get a new bank account at a new bank with only your name and redirect your paychecks to this account.  Build a budget based on your earnings.  Make a list of all the expenses you anticipate keeping (and this probably includes child care).

Are you making enough to cover the basics?  If there is a spending gap, consider two things: 1) how can you get your income up? 2) what level of support can you anticipate from your ex?

Additionally, where can you cut?  Does your housing need to change?  Do you need to cut back on a few additional expenses?  You will be tempted to keep lots of regular spending in your life to give you some normalcy, but also consider the long-term impact of debt and how when you are newly single it will be an even bigger burden paying back.

Retirement and Updating Beneficiaries

We have all heard the stories of an ex-spouse receiving life insurance because the beneficiary was not changed.  This is not an urban legend, it does happen.  Go and review all your retirement accounts and life insurance accounts to ensure your new family structure is reflected in the beneficiaries.  Consider also changing your will to determine who will handle your estate matters and potentially care for your children.

Review your retirement.  Where are you now?  How much will you need individually to retire?  Many times, in life transitions it makes sense to connect with a financial advisor to get professional third-party support.

You have made a big life change.  Take your time in making big financial decisions, but also be clear on where you are now.  Being uninformed is to your detriment.



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