Marriage is about love. Divorce is about money. Annonymous.
When couples decide to divorce, they worry most (when applicable) about their children. But, worry about money closely follows. And, for good reason.
Most couples find it difficult to support one household on their income. Now the same income must support two homes.
Couples who rarely discussed finances (one of the chief causes of divorce) must now discuss and agree on budgets, assets, and debts during the divorce process. Their decisions will impact the rest of their lives and most often can’t be changed once submitted to the Court.
Financial preparation proves critical. If they do their homework, couples can successfully negotiate issues. More, they create financial stability for both homes after the divorce.
Tips to remember include:
Tip 1: Track monthly expenditures.
Let’s face it, Americans hate budgeting. In this country, tracking personal spending is seen more as torture than a practical life skill.
More, the advent of automatic payments has only decreased most people’s understanding of how much money they have and where it goes. Yet, tracking expenses proves critical in divorce.
Spouses must know how much they will need to live in order to plan future security and to understand their options. Conflict escalates when couples try to make decisions in a vacuum. Concrete numbers define the possibilities and help ensure couples can work together.
Tip 2: Establish/protect credit ratings.
Especially important for spouses who have been out of the workforce, everyone entering a divorce should run a credit report to see what’s there.
Their credit score will impact the availability of credit, interest rates, and other options available after divorce. Taking the time to address any errors before filing for divorce will ease the process. Finally, establishing personal credit facilitates life after the divorce.
Tip 3: Gather all financial data.
Gather at least three years of tax forms, bank records, investment and retirement account summaries, and documentation on any other asset. Especially if one spouse has primarily overseen the finances, both will need to fully understand the financial picture to effectively make decisions. Providing concrete documentation increases trust between the spouses. Which, in turn, creates more productive discussions.
Couples work together best when they adopt a mindset of “how do we use our marital resources to ensure we are both financially secure after the divorce and (if applicable) able to care for our children?” Instead of demanding “rights” or using property to make up for past wrongs, couples begin working cooperatively and focusing on the future.
Tip 4: Open separate accounts.
Marital assets should not be transferred without at least the permission of the other spouse and more appropriately as part of the financial decisions in divorce.
At the same time, opening separate accounts begins the process of establishing a separate financial identity. Spouses begin to mentally wrap their minds around working separately and making independent decisions.
Separate accounts also facilitate moving ahead on financial decisions during the proves.
Tip 5: Consult financial professionals.
Financial decisions in divorce shape the rest of life for each spouse. Understanding investment options, long-term pictures, and tax consequences all prove critical to making the best use of marital resources. Money spent on professional advice now proves invaluable on lifestyle later. Couples should find and utilize this expertise before making permanent decisions.
If you would like more information on how divorce might impact your finances, call 317-344-9740 or email info@TheResolutionCenterIndy.com. We look forward to answering your questions and providing support.