Financially prepare yourself for Divorce

Brought to you by Michael Barras
When life hits you with a divorce, it can be overwhelming and emotional.  There are a few things you will want to take care of immediately.  One of those is hire a divorce attorney.  The next is something people don’t think about – consult a financial advisor.  It seems like people should think of this, but in the heat of the moment it is forgotten.  This should go without saying, but everyone should have about $2,000 in emergency cash reserved.  You have to have realistic expectations when going into a divorce.  Your lawyer can lay out how things are predicted and help you prepare for the worst.

There are many things to consider and you should be prepared for each one.  Primarily, you will go from a dual income to just your own, and if you are the party that has a lower salary, it will take some adjusting.  A financial advisor can help you get back on track.  A simple thing would be creating a new budget for yourself – and more importantly, sticking to it.  This will need to be done early, meaning before the divorce is settled.  The lifestyle you had when married has the potential to be drastically different than as a single person.  Neither party will live the same way.

Your financial advisor will probably tell you to just look at the bills you have in your house.  It will help you get a real idea of how much money you will need on your own.  If you think you won’t be able to pay your bills, then you have to consider other options for yourself.  You might not be able to afford that big house or the extra car.  You might also be able to find a way to make this temporary.  After getting finances in order, you might be able to save and afford those luxuries again.

Another reason to consult a financial advisor is that your taxes will change, especially if you have children.  It will need to be settled who will claim them as dependents.  Health and car insurance also needs to be amended.  You will get new estimates on car insurance based on yourself and dependents.

You will want to immediately consult your lawyer and amend your will as well.  Probably the last thing a divorced person wants is to have all of their possessions go to their former spouse because they forgot to change his/her will.  Between your lawyer and financial advisor you will be able to quickly cover all of your bases: life insurance, auto insurance, retirement fund etc.  Be sure to untangle all joint funds because if your ex-spouse makes any mistakes, the bank views them as your mistakes as well.

If you were in a position where your spouse was the only source of income, you will need to begin to look for a job.  The best thing to do is to make yourself marketable.  You need a job at the time of the divorce, not after.  It takes time to find a job, so if you start looking early, you have a better chance of being in a better financial position post-divorce.  Do not underestimate the amount of time that it takes to find employment.

Having these things taken care of makes it easier to focus on children and their needs.  During divorce it is good to maintain rituals and attempt to keep a stress free environment.  Without these financial and legal problems knocking at your door, it will put you more at ease.

None of this is meant to scare anyone filing or going through a divorce, of course.