Managing Your Finances During Divorce

Divorce is a complex emotional and logistical process. Throughout the divorce process and after finalizing your divorce, it is crucial that you safeguard your financial health. Below, we discuss key steps to take control of your finances throughout the divorce process:

Understanding Your Financial Situation

To protect your future finances, you first need to know your current financial situation. Collect bank statements, credit card statements, investment records, pay stubs, tax returns, and mortgage statements. This comprehensive overview provides a clear picture of your assets, debts, and income streams.

You should also collect information about your spouse’s income and separate assets. Then, identify all joint accounts (checking, savings, investment) and individual accounts held by each spouse. Determine the value of each account and any outstanding loans or liabilities.

All the collected data can help with the asset division process. By taking stock of your financial situation, you can also understand your child support and alimony needs.

Establishing Financial Independence

Once you have an established date of separation, you will want to avoid commingling funds or assets. You can achieve financial independence by:

• Separating your accounts. Open individual bank accounts if you currently share joint accounts. This provides greater control over your finances and minimizes the risk of unexpected withdrawals by your spouse.
• Building your own credit profile. Establish credit cards in your own name and build a positive credit history by making timely payments. This is essential for securing future loans like mortgages or car loans. You should also note any joint accounts to avoid adding to the joint debt and know which accounts you should aim to close following your divorce.

Creating a Budget & Financial Plan

Once you have an idea of your financial situation, you should create a budget to anticipate changes in income due to spousal support or child support adjustments. Create a realistic budget that outlines your essential expenses, such as housing, utilities, groceries, and transportation.

When creating your budget, you should consider the following:

• Your spending habits. Identify areas where you can reduce non-essential spending, like dining out or entertainment. This will free up funds to cover individual expenses and build emergency savings.
• Your financial goals. Establish both short-term and long-term financial goals. For example, you might establish an emergency fund, while long-term goals could include saving for retirement or a child's education.

Having a post-divorce budget can help you understand what assets you wish to retain in a divorce and what your financial needs may be when negotiating alimony or asset division. For instance, you may realize that you want to sell your home and split the profits rather than fight to retain ownership because the upkeep costs would be too much for you.

Negotiating a Fair Settlement

Working with an attorney can be a crucial step in protecting your financial well-being throughout this transition. An attorney can provide invaluable guidance in several key areas and ensure a thorough understanding of your financial situation.

They will assist in gathering and analyzing all relevant financial documents, including bank statements, tax returns, and investment records. This comprehensive picture allows for a clear assessment of marital assets and debts, which is fundamental to negotiating a fair settlement.

Furthermore, an attorney can advocate for your best interests during settlement negotiations. They possess the knowledge of state divorce laws and legal precedents to ensure you receive an equitable division of marital property. Attorneys are skilled negotiators who can effectively communicate your needs and fight to secure a settlement that safeguards your financial future.

Seeking Legal Help

An experienced divorce attorney can help you navigate your case's legal and financial issues. The McKinley Irvin family law attorneys can help you understand your rights and obligations, explain how to safeguard your finances throughout the divorce process, and help you negotiate a favorable settlement. For more information, get in touch with our team.