A divorce will hit many areas of your life, and one particularly hard-hit section is often your finances. You are probably already aware of the long-term financial changes you’ll need to make, such as updating policy beneficiaries and getting new estate documents drawn up, but there are some quick things you can do right now to help improve your financial situation during and after your divorce.
Get Your Credit Report
Your credit is essential for financial stability. Your score tells lenders how credit-worthy you are, and that magic number will impact your ability to borrow and access credit products and what types of fees and interest you’ll pay. You don’t want to find out that your credit is going to make getting an auto loan difficult only when you go to buy a car.
Check your credit reports with each of the three major bureaus–TransUnion, Equifax, and Experian–to see where you stand. You’re actually entitled to a free report from each bureau per year under federal law, so checking shouldn’t cost you a dime if you haven’t used your free report for the year yet.
Once you know what your credit looks like, you can draft a plan to help improve it so you don’t struggle to access credit on your own once you’re divorced. Don’t forget to review those reports for errors, too, as you can dispute mistakes on your reports that may be dragging down your score.
Set a Strict Budget
Many people find it daunting to completely overhaul their budgets in the wake of a divorce. For now, make a quick, strict budget that automatically assumes the worst-case scenario. List all monthly payments you have and all sources of income that are purely your own. Don’t include items you expect to receive, such as child support. Things may happen that cause those income sources to disappear. If, for example, your ex loses their job, you may not receive support for a time.
Once you have those figures on hand, you can create a budget that ensures you are covering the essentials on your own, with sources of income you know you can depend on. Stick to this budget; if all works out in the end and you receive the support you expected, you’ll have some unexpected savings to fall back on.
Set up an Emergency Fund
Once the two steps above are done, you can start creating an emergency fund. You can, for example, open a free checking account at your bank and put a small part of your paycheck into this account every payday. You can also go with a savings account, but be mindful that many savings accounts require that you keep a minimum balance to avoid fees. If keeping the money in the account above that level could be a problem for you down the road, stick to the free checking account for now.
Keeping this money, even if it’s not a lot at first, in a separate account will make it more inconvenient for you to access it, and therefore less tempting to use. Again, you don’t have to put away large amounts of money if you can’t afford to; just having $10 a paycheck go into that account will help you build a safety net in case some unexpected cost pops up.
Divorce tends to bring stress, and it can be very tempting to let things like your finances slide. However, it’s important you stay on top of your own finances as best as possible during the divorce to help minimize the additional stress financial troubles bring. Take the steps above immediately so you can begin to build your post-divorce life with a stable financial base.