A recent study found 46% of women did not expect their divorce to bring the financial circumstances it did. This finding may relate to studies that show women reporting lower financial literacy and confidence than men.
If you are separating from your spouse or considering divorce, it’s important that you are prepared to separate your finances from your spouse, budget for divorce-related expenses and prepare for financial independence. Here are a few tips that can help.
If you aren’t certain of your individual household income and expenses, start recording this information. After a few weeks, you’ll have a better idea of how much you should budget for divorce-related expenses and life after divorce.
You’ll also be in a better position to discern how assets and debts should be split, the amount of child support that should be paid and whether an alimony arrangement may be necessary.
To track your spending, look at bank and credit card statements to estimate the monthly expense for the following items:
- Bills (phone, internet or cable, mortgage, utilities, etc.)
- Transportation, including automobile insurance if applicable
- Minimum debt payments
- Child care
- Home goods
If you find any room to cut down your expenses, take the opportunity to save what you can while your cost of living is still split. Depending on the circumstances, divorces may entail hidden expenses. If you share property and have minor children with your spouse, the process can cost upwards of $15,000. For example, potential costs of divorce may include:
- Court fees
- Attorney fees
- Mediation fees
- Refinancing your home
Gather necessary documentation
You’ll need to know whether you and your spouse are both listed on loans, life insurance, vehicles and more. You’ll also need to provide evidence of each of your financial states. Considering making copies of the following items, if applicable:
- Financial statements of each spouse
- Income tax returns of each spouse over the last three years
- Employee benefits, military benefits and/or retirement information
- Mortgage(s) cost and status
- Paystubs showing employment for each spouse
- List of assets
- List of debts
- Insurance information
Consider legal separation
If your divorce may not be amicable, consider asking an attorney about legal separation before your income, assets or debts are taken advantage of. You may also be able to separate your finances in a few other ways, such as:
- Closing joint banking accounts
- Removing your spouse from estate planning documents, such as a will, power of attorney, living will, etc.
- Removing your spouse form beneficiary privileges on your pension, 401K, IRA and/or life insurance
Finances can be tough to navigate — especially while going through the array of emotions brought on by divorce. If you are only considering divorce, but are worried about how the decision may impact you financially, a divorce lawyer can help explain your options.