If you are about to file for divorce, you probably have many things on your mind. From the optimal way to divide everything, to custody arrangements from the children, to how your finances will look after all is said and done. The last thing you need at this time is to have to listen to the downpour of advice from well-meaning relatives and friends as to what you should be focusing on and what will work best for you. You know that, at this time, your energy should go towards preparing yourself financially for the divorce. Taking some strategic steps now can make a big difference in your financial future. Here are some important steps to consider:
1. Start Tracking Your Income and Expenses
Having a clear picture of what money comes in and how much goes out will not only serve to help you plan a post-divorce budget but will be an important tool for your lawyer when it comes to deciding how to divide the assets.
Include your household bills and the money you spend on home maintenance but also child care, transportation, food, clothing, and more. Refer to credit card and bank statements to help you paint an accurate picture.
2. Gather all Financial Records
Although time-consuming, this will give your attorney some vital information. Put together a file that includes:
- Bank statements – Checking and savings accounts, retirement accounts, investment accounts,
- Loan statements – Mortgage, car loans, personal loans.
- Credit card statements
- Pay stubs
- Income tax returns
- A list of both assets and debts – Mark which were brought into the marriage and which came later.
3. Avoid Making Big Financial Decisions
Any divorce represents major financial changes. Do not fall into the temptation to get a head start by changing the beneficiaries of life insurance policies or retirement accounts. By doing so you risk the judge awarding your spouse. Even if you have already filed for divorce, these types of changes without informing the court may result in criminal contempt charges. Talk to your divorce lawyer before making any moves.
4. Don’t Run to the Bank
It may be tempting to empty out your bank account. Maybe because you don’t trust your soon-to-be-ex or maybe because you need funds to hire a divorce lawyer. Whatever your reason, it’s best to keep all financial matters transparent and continue using your accounts as usual.
If you cannot communicate with your spouse, ask your lawyer about a legal separation which would specify how each of you can use any money until the divorce is final.
5. Prepare for the Future
It’s not only important to know your current financial situation, but you also need to turn your eyes towards the future and picture your life in 5, 10, or 20 years. Think about whether it’s more important for you to stay in your current home or to feel more financially secure somewhere else. Also, think about:
- Your current and future job situation – Will your income increase or will it go down?
- Your health and the medical coverage you will need – Are there any options?
- Your training – If you need to go back to school, will you be able to afford it?
- Your children – What are their ages and do they have any special needs? Will you be able to afford childcare?
Having a detailed understanding of your financial picture and making a financial plan for your future will be an invaluable asset to have. Your divorce lawyer can also help you make the best financial decisions, look for one that has experience in family and divorce law and has handled cases similar to yours.