Through my years assisting individuals with their finances, I have repeatedly faced the need to help women going through financial transition. There are many life experiences leading to these transitions. Divorce can be a very tumultuous time for someone; finances are only a part of the tremendous life changing ramifications. Dividing finances takes preparation.

  1. Seek professional guidance immediately when going through a divorce. Consult both legal and financial professionals to help you make decisions and preparations for the new phase of your life. Your Lawyer and Financial Advisor should work in tandem to guide you for the smoothest transition.
  2. Gather your important paperwork in order to establish the net worth of the marriage. Create a list of all names, addresses, and phone numbers for all assets and debts. Some suggested documents are:

– Pay stubs or income documents

– Bank account statements (Checking, savings, CD, money market, etc)

 – Loan statements (Personal, Auto, Mortgage, etc)

– Credit Card statements

– Brokerage account statements (IRA, Mutual Fund, Stock, etc)

– Retirement account statements (401k, 403b, Pension, etc)

– Insurance policies, Annuity contracts

– Tax returns

– A copy of your credit score

       3.   Divide financial accounts sooner than later. The earlier you can separate finances, the easier it will be down the line. Open separate checking accounts , cancel joint credit cards, and issue new ones in your name only. As the divorce is finalized, joint debt will be divided. Make sure you separate accounts early on so as not to incur a “surprise debt” in both of your names.

        4.   Maintain or Establish good credit as divorce can have a negative impact on one’s credit score. It is important to acquire a copy of your credit score early in the divorce process. Do not accumulate any additional debt and work on paying down existing debt. *If you do not have credit of your own, consult your financial advisor about applying for a credit card in your own name before the divorce is finalized to enable home and car purchases while on your own.

       5.  Protect yourself financially. Divorce is expensive, but don’t let it jeopardize your financial future. When looking at the settlement proposal of a divorce determine:

        – do you have a reliable cash flow? Make sure you document your expenses before agreeing to the proposed cash flow

        – do you have enough cash for emergencies?

        – will you need to borrow money to make ends meet?

        – do you have a lot of illiquid assets? Will they be difficult to turn to cash if needed?

       –  will you be able to pay your taxes and bills?

     6.  After the divorce is final, managing finances is a new experience. You must work with your financial advisor to establish goals, create budgets, balance finances, and save for retirement and/or child’s education.

       – Review and revise goals constantly. Many of my clients going through this process need to meet more frequently in the beginning to help put things in alignment. Financial planning is a framework for an ever-changing life.

       –  Take control of your career. You are establishing independent financial households, you may need to change jobs or add jobs in order to meet your obligations and build for your future. Embrace it and enjoy reaching for new personal goals.

        –  Revise your will. You have worked hard for anything you have so make sure it will transfer to the proper individuals.

        –   Reduce debt and increase savings. Create an emergency fund to give a cushion for unexpected situations. Try to save a percentage of your income to build for your future.

       –  Take charge of your own retirement. Work with your financial advisor to plan for your future retirement. They will assist you in establishing a future income goal and retirement date, and how to achieve these goals.

Divorce, like all life transitions, can impact one’s finances greatly. Together with your financial advisor, establish a financial plan to help guide you to a strong financial future. This simple step will help ease the stress of finances during an already highly stressful phase of life.