The emotional stress of a divorce often takes front seat in the minds of those going through it. Under these circumstances, it's easy to give thinking about finances and the financial implications a divorce a lower priority. But especially in a divorce with many shared assets, getting finances in order can help you be happier and less stressed in the long-run.
It is important to know that a divorce can cost you assets you thought you would have for the rest of your life, and it is common for things like a house to be divided. However, being aware of a few guidelines can help minimize the damage of an upcoming divorce.
1) Do not go through it alone
Having a financial analyst who is certified in divorce can help ease financial burden, and having a therapist or counselor to talk through the emotions can help with this highly difficult life experience. Additionally, find a divorce attorney you trust who will help you through the divorce.
2) Pay attention to your credit
Review your credit report before the divorce to make sure any debt or account that is not your own does not stay on your credit report. Because your credit score could drop as a result of the divorce, it is helpful to apply for your own credit card before the divorce is final. Use this card to make purchases that you can pay off immediately, to help build good credit.
3) Adjust your budget based on your new income
Some people assume that after a divorce, their expenses will simply be cut in half. That is not usually the case. Write out a new budget based on your own income, including any alimony you will either receive or pay, and any child support you will receive or pay if you have children.
Some expenses, such as your utility bill and rent or mortgage, will stay the same after the divorce if you do not move, but you may be responsible for all of it instead of splitting the cost with your spouse. Some things also cost more for unmarried individuals, including car insurance and income tax.
A financial advisor can help you create a budget and manage your finances. Along with legal support from an attorney, a financial advisor can help figure out if any lifestyle changes need to be made, what to cut from your budget and what to add.
4) Do not make huge financial decisions during or shortly after the divorce
As it can be a highly emotional time, it is tempting to think that a huge financial change could help you feel happier or more fulfilled. Actions like selling your house to move to another state or country to start over are not advised by financial advisors until you take time after the divorce to evaluate your finances and figure out what you really want to do. Large financial moves like this could leave you in financial hardship for years to come. Wait until you have a more settled mindset and have worked through the emotions of the divorce before making any huge decisions.