Most of us groan when thinking of setting up a budget, but this task is essential if you are going through a divorce. Most likely, you won’t be at the same income level after you divorce and now is the time to have a plan for when that day comes.
In fact, before you file for divorce, you should get your financial records together to help show what you and your spouse’s assets truly are.
As part of that, you’ll need statements from your checking and savings accounts for the past year, retirement savings statements, life insurance policy information, your tax records for the last three years and records of any outstanding debts (mortgage, auto, credit card, student loans).
You’ll also want to track expenses closely now. Your spouse may try to hide declared income and that can show up if suddenly he or she is buying lavish items, but also claiming a much lower income than in the past.
You need to set a realistic budget for after divorce. Tracking your expenses will show you where your money is going. If you have childcare costs to calculate, you need to know what those will be when you will be paying half of them.
You’ll also want to know how much money your family spends in a month and look for ways to reduce what you are spending. Divorce leads to financial change, so you’ll have to think about what you can live without.
Wait on big financial decisions
As you go through the divorce process, wait before you decide to change beneficiaries on your retirement accounts or life insurance, or change your will. The judge could view those actions poorly, so consult your attorney before making such a move.
You’ll need money to cover your legal fees and to set up a life on your own, so start saving right away. If you share joint bank accounts with your spouse, try to negotiate how you will move forward with spending until the divorce is final.
If you think sharing an account will be too difficult amid getting a divorce, consult an attorney about legal separation to officially dictate to both partners how to use money until the divorce is final.
If you are proactive and know more about what your budget will look like post-divorce, you’ll reduce your stress and be better prepared for the future.