It is no secret that a divorce can affect every aspect of your life, including your finances. In fact, unsurprisingly, money is one of the most heavily contested issues in a divorce. If you are considering getting a divorce, you should take some time to prepare from a financial perspective. You can use the following tips to get the process started.
1. Take a hard look at your budget
In many households, one spouse or the other takes care of the budget. He or she may be acutely aware of which bills are due and when, but the other spouse may be entirely in the dark. Some spouses have never made a budget before or have relied so heavily on their partner that it has been years since they have had to create one.
If possible, take a look at how your spouse does the budget. Consider which bills will stay with you and which bills will go away in a divorce. You may not have a full appreciation of what you will need from a financial standpoint to get by every month. Taking a look at your current budget will help you get a feel for what to expect.
2. Create an emergency fund
You should start setting aside some funds for individual emergencies, whether that is for unexpected expenses in the divorce or for expenses that crop up due to your children. When you start considering divorce, it is a good idea to have money readily available. You can also use this money for your retainer to hire an attorney.
3. Gather Documentation and Information
Your financial records will be helpful in going through the divorce process as well as determining what kind of funding you will need after the divorce. Going from a two-income household to one can be shocking, and you will need a lot of information to be prepared for the transition. It is a good idea to gather the following documents or statements:
- Checking and savings accounts
- Retirement accounts
- Investment accounts
- Ledgers for outstanding loans
- Recent pay stubs
- Credit card statements
- Income tax returns for the past three years
Having all of this information will allow you to examine where you stand financially, and it will be helpful to create a plan for the financial aspects of the divorce process as well.
4. Seek an attorney
Many people choose not to retain an attorney when they go through a divorce because they are worried about the cost. Do not make this mistake! An attorney may be an investment right now, but it often pays off in the long run. Your lawyer can also point you to a knowledgeable financial advisor that you can use before you file as well.