Even during the most amicable divorce and with the most favorable settlement, your finances will take a hit. Legal fees, property division and supporting yourself after the divorce can all take a strain on your wallet. But it does not need to devastate you. The financial burdens you face will be worse if you do not prepare for what is coming.
But how exactly do you prepare your finances for divorce? Below is a guide to getting your finances ready so you can weather the storm.
1. Gather important documents
As soon as you know you will be getting a divorce, locate and organize your financial records. You should start this process as soon as you can according to personal finance advice site NerdWallet. Start gathering the following documents:
- Tax returns from the past three years
- Bank account statements from the past year
- Credit card statements from the past year
- Pay stubs from the past few months
- Investment account statements from the past year
- Current retirement account statements
These documents will verify your assets, debts, income and expenses. Gathering these documents early will save you time, stress and money.
2. Track and anticipate expenses
It is crucial to be aware of your current income and expenses, not only for helping the divorce process but also for figuring out your post-divorce budget. Include monthly bills, food, clothing, transportation and entertainment. Then start preparing for future expenses. This will help you to be ready for life after divorce.
3. Avoid making significant financial decisions
Wait to make major decisions until after your divorce. Refrain from changing your will, retirement account or adjusting the beneficiary on your life insurance. Changing these things before the divorce is final could hurt you and even cause legal trouble.
While every divorce is unique and requires detailed personal advice from legal and financial experts, these three tips will help you start on the right track.