Divorce brings a lot of changes to nearly every area of your life, including your finances. When you’re already going through change and stress – and especially if you’re also having to provide a support system to your children – something will have to give. For many people, the area that is most likely to be overlooked in this situation is their finances. With the right preparation and advice, however, you can create a plan to confidently manage your finances during a divorce with much less stress.
As a legal team, we have helped hundreds of clients through the divorce process, and some members of our team have been through divorces themselves. When we work with a client on their divorce, we work to coach them through many of the details and changes that they will face.
Today, we’d like to share some of these tips to help you prepare.
Tip #1: Create a New Budget
Whether your family has been functioning with two full-time incomes or one spouse has stayed at home, perhaps to raise your children, divorce will bring a new financial situation.
If both spouses work full time, you’ll soon be operating on one income. If you have been out of the workforce, you may have to look at reentering it. What will this look like?
If you try to envision your new financial situation all at once, it can be overwhelming. Creating an initial budget can be very helpful – if nothing else, it will allow you to break everything down into manageable parts.
Think through your different potential expenses, from the obvious ones (like rent or mortgage, groceries, and utilities) to those that might not be so obvious (clothing expenses, fun days out with your kids, and gifts).
Remember that this is just an initial budget – it doesn’t have to be your final numbers. It’s just to get you thinking through preparations you may need to make.
Tip #2: Start Shoring Up Your Credit Score
Your relationship status itself does not affect your credit score, but separating out your finances can. If you have joint accounts and credit cards with your spouse – or if you’re an authorized signer on any of their cards – your credit score can be influenced by being removed from those accounts.
By starting to build credit in your own name, you can minimize this impact. Making significant financial changes during a divorce can in itself be problematic, so we do recommend that you talk with an attorney or financial adviser before making any large changes so that you’ll know what to pay attention to and what to look out for.
Tip #3: Document Everything
When you start your divorce proceedings, one of the things you’ll need to do is disclose your financial holdings and assets; your spouse will need to do the same. This is for a few different reasons, but one of the major reasons is to allow for equitable division of assets.
In order to make this process easier, you’ll want to get in the habit of documenting everything. However, this process can also help you in another way.
For many of us, our lives get so busy that we don’t always pay attention to how we spend money. Grabbing a coffee on the way to work, stopping for lunch with friends, or splurging on a night out don’t always seem like “big” expenses – and often, they’re not.
While you’re getting used to a new financial situation, however, these expenses can add up quickly. By documenting how and why you spend money, you’ll be better equipped to make new choices and create new habits. This can help to reduce a lot of the stress you might otherwise encounter!
Tip #4: Consult with an Estate Planning Attorney
There are several major changes that happen in life that will trigger updates to your estate plan, and divorce is one of them. If you don’t currently have an estate plan or if you would like a review, we can help – at Diamond Legal, our divorce law and estate planning attorneys are right down the hall from each other!
From updating your beneficiaries and protecting your assets to avoiding unnecessary taxes, an experienced estate planning attorney can help you in many ways. We do everything we can to make the process easier on you.
Tip #5: Hire a Divorce Attorney – Even if You Decide on an Uncontested Divorce
On the surface, it might seem like it would be easier, faster, and less expensive to try to DIY your divorce, but this can actually end up costing you a lot more money down the road.
There are a lot of details and nuances involved in the divorce process, and many of them are just not things most people would know to look for. Separating two lives (and joint accounts) is not a simple thing.
Being able to talk with a divorce attorney and have them review your paperwork can save you months or years of back-and-forth with the courts as well as thousands of dollars in future legal fees. When a DIY divorce agreement isn’t completed correctly, it may not be accepted by the court – and it may end up costing a lot more money to try to fix what’s missing than to simply have an attorney review it in the first place.
Our legal team handles both contested and uncontested divorce. If you and your spouse agree on almost everything and decide to go with uncontested, you can hire an experienced attorney for a flat fee and have the peace of mind that things will be done right the first time.
If a contested divorce is necessary, rest assured that our team is ready to protect you, your assets, and your family, and that we’ll be with you every step of the way.
If you have questions or would like to schedule a consult with an attorney, click below and call our office today. Our team will be happy to help!
DISCLAIMER: Any information contained herein is solely for informational purposes and is only applicable in the state of Illinois. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.