Post-Divorce Financial Management

A divorce or legal separation has an immediate impact on finances for both spouses in most cases. While you may know what to do during the divorce to keep the lights on, you will need to be prepared to take control over your money once the marriage is officially over. As you go through your divorce with your family law attorney, consider the following strategies for managing your finances after your divorce is made final.

Examine and Know Your Financial Footing

You will need a very clear understanding of your finances to support yourself and keep your financial independence after a divorce. Look at your tax returns, investment accounts, and all of the bank and retirement accounts you have. When you know what these figures are, you will have a better idea of just what resources will be available to you in your post-divorce life.

Close out all joint accounts you have with your spouse. These should be handled as part of your divorce, so you will know what to do and what not to do. If you leave your spouse’s name on an account whose funds you are going to use, they will retain access to those accounts after the divorce is final, which could pose a real problem.

Ask your family law attorney for help if you think you do not know about or have access to all of the assets in your marriage. Your attorney will work with financial professionals to uncover any hidden assets and ensure you are treated fairly when it comes to the property division aspect of your divorce.

Update Your Budget

If you don’t have a budget, it’s time to create one. If you do, it’s time to revise it to reflect your new lifestyle. Create a list of your seasonal and monthly expenses so you can plan where your money needs to go. This will help you avoid being hit with any surprise expenses down the line. At the very least, your list should include the items below.

•       Auto, health, disability and property insurance
•       Investments and retirements
•       College savings and child care (if applicable)
•       Housing costs, such as rent or a mortgage and home upkeep costs
•       Utility bills
•       Food costs
•       Entertainment expenses
•       Clothing and other household expenses, such as toiletries

As you make your list, start looking for ways to save money. If, for example, your food costs are high because you tend to buy your lunch at work, consider bringing lunch from home instead. Even small savings can add up over time.

When you consider income for your new budget, use solid sources only. While you may expect to receive spousal support, for example, there’s always a chance your spouse will become unable to pay it, so you can’t rely on that money.

Rebuild Your Own Credit

Married couples may have joint credit card accounts. If this applies to you, it’s time to begin building a credit history solely in your name. It’s your credit score that will decide whether you are approved for a loan and what your rates will be, so you must show potential lenders that you can handle credit all on your own. Borrow just what you need and always make your payments on time. For the best score, keep your total balances below 30 percent of your total available credit at all times.

Getting your finances in a row for your post-divorce life can seem daunting, but it’s well worth it. Once you know what you have to work with, how to trim your budget and rebuild your credit, you’ll be on more stable financial ground in your post-divorce life.