Going through divorce is challenging on a number of levels. You’re separating your life from the life of someone you used to love very much. Depending on your situation, you may be dealing with feelings of guilt. If the divorce is less than amicable, you may be struggling to handle that plus your normal 9-to-5 job. And if children are involved, it all gets so much more challenging. While it’s easy and even normal to get completely wrapped up in your divorce proceedings, be vigilant and don’t let divorce turn into bankruptcy.
The average divorce costs $15,000, according to a recent article in CNN Money. That price tag only applies to the time immediately surrounding the divorce proceedings. The long-term costs of divorce may be much steeper.
In the article, a New York City financial planner gives an example of these long-term costs. She says, “The money you’d put away to fund retirement together now has to cover two separate retirements.” In addition, after you’re divorce, you’re navigating the world as a single individual with one income instead of two.
There are things you can do to help your finances stay strong during your divorce. First and foremost, do your homework. This means knowing the vital signs of your finances before heading into divorce proceedings. CNN Money says, “Gather investment and bank statements, going back at least a year. Copy tax returns for income history. Pull your credit report to know what debts you have.”
In addition, it’s important to consult with a lawyer so that you know the laws in your state. For example, is your state a “community property” state, which means assets obtained during marriage belong equally to both parties? (New York isn’t.) Once you’ve done your homework, consider opening accounts in your name. You may want to apply for a credit card at that time while the household income is higher.
During the actual divorce process, there are still opportunities to keep your finances stable. One thing you can do is to carefully consider the type of “help” you’re seeking. CNN reports, “Working out a settlement with a mediator may save money. But if your finances are complex or you’re relations contentious, an attorney can help you avoid mistakes or costly concessions.” If children are involved, you’ll want to ensure your divorce settlement is very specific when it comes to the big costs. For example, how will glasses or college tuition be paid for?
After the divorce is final, continue to protect your finances by coming up with a new financial plan. It’s important to take into account your new income and costs associated with living as a single individual. In addition, you may need a new plan to build up retirement savings or to even pay for health insurance if you were previously covered through your spouse. It is also wise to redo your will after a divorce if you don’t want your ex to gain any of your assets.
Getting divorced is already challenging enough. Protect yourself from further challenges, like bankruptcy, by ensuring your financial health before, during, and after divorce proceedings.