Working Through Finances and Divorce

If you find yourself staring down the road at a divorce, it is vital that you get your finances in order. Divorce is often difficult emotionally, physically and mentally. Adding financial strain and pressure to divorce proceedings and life after divorce only makes it more difficult to get your life back in order.

If you and your spouse are divorcing, working together one last time to ensure financial security for both of you may feel impossible, but it could go a long way towards smoothing over a rocky relationship. Whether you and your soon-to-be ex- spouse choose to work together or alone, here are a few things you need to work out before you sing the final papers. There is free legal assistance for certain situations which can be found here.

Gather all financial statements
To navigate the financial aspects of divorce successfully, you should have copies of all of your financial statements. This includes monthly bank statements, credit card statements, debt statements and asset statements.

 
Your attorney will want to review all of your financial aspects to ensure fair treatment in the split of assets. During the process of divorce, there are a few things to keep in mind to prevent financial complications.

• Do not make any large purchases that could cause financial complications
• Do not move out before speaking with your attorney
• Do not give away, transfer or sell jointly-owned assets
• Don’t forget safe-deposit boxes
• Make sure all taxes are up to date
• Collect all copies of financial papers including pay, taxes and bills

Create a budget
Following your divorce, you may have more financial responsibilities (like alimony or child support). To ensure you are able to meet all of your financial obligations it is important to make and stick to a strict budget. If you have already been following a budget in your marriage, you may already be used to this. If not, it will take some adjustment.

Your new budget will include housing expenses, utilities, cars, debt, food and insurance. Many of these expenses you may have been splitting with your partner. Now, you will have to foot these expenses on your own. Having a budget will help you navigate your new financial situation much more easily. In some cases you may need money to help get started with a new life, consider non-profit or benefit loans if you need to borrow. You should also review any potential benefits you may qualify for based on you new situation.

Consider retirement
In many homes, one spouse works while the other stays home to care for children or works part time. This often means that only one spouse has sufficient retirement savings. This can be problematic, especially if you divorce later in life.

If possible, avoid this by setting aside money each year in Super. If you are already past the point where this is possible, it may be necessary to budget in extra money to put towards retirement. You may also have to take on additional work or talk to your lawyer about getting some financial compensation from your spouse to put towards retirement.

 
Before, during and after divorce proceedings, make sure to review the following so you can prepare better.
• Should any beneficiaries change on insurance policies (particularly life insurance and health insurance)
• What are the tax consequences of financial compensation from a divorce?
• How will you handle the current year’s taxes?
• What are liabilities you need to figure out before the divorce is final
• Who will provide child support?