top of page

38 Essential Money Secrets of Divorce: What You Need to Know BEFORE Starting the Process

dollar bills
Divorce means big changes for your budget. Early education and planning is your key to a sucessful split.

If you're going through a divorce or considering one, planning ahead financially is key to a smoother transition.


This quick guide of 38 money secrets from divorce professionals is a great first step toward protecting your financial future after your divorce:


1. Start a Divorce Fund Early


Divorces can be financially draining. Begin setting aside funds for legal fees and unexpected expenses as soon as possible.


2. Understand Your Finances


Gather all financial documents, know your assets and debts, and have a clear picture of your financial standing before initiating divorce proceedings.


3. Consult a Financial Advisor


A financial advisor can offer guidance on investment strategies, tax implications, and asset division during divorce.


4. Keep Track of Spending


Do you have an idea of what it costs to live your life every month? Maintain a record of your expenses to have a realistic understanding of your financial needs post-divorce.


5. Update Beneficiary Designations


Review and update beneficiaries on insurance policies and retirement accounts to reflect your current circumstances.


6. Budget Wisely


Create a budget that aligns with your post-divorce financial situation and stick to it to avoid unnecessary financial strain.


This customizable monthly budget calculator walks you through every possible expense and does the math for you! It's your secret weapon during divorce and an essential tool in your life afterwards.


7. Establish Credit in Your Name


If relying on joint credit, start building your credit history independently to secure your financial stability.


8. Plan for Child Support and Alimony


Will you receive or pay support after divorce? Will you be paid support? Understand child support and alimony laws in your state to ensure you are prepared for financial obligations or entitlements.


9. Maximize Tax Benefits


Take advantage of tax deductions related to divorce expenses, child support, and alimony payments. Talk to your tax person ASAP about the financial changes coming your way to anticipate your tax exposure.


10. Protect Your Business


If you own a business, safeguard your interests by assessing its value and determining the best approach to division or buyout.


11. Consider Health Insurance


If you're currently covered by your spouse, start exploring your options for health insurance coverage post-divorce to avoid gaps in medical benefits. Make sure to include this future expense in your projected post-divorce budget.


12. Secure Your Retirement


A big life change like a divorce can have a ripple effect on your future plans. Assess the impact of divorce on your retirement savings and make adjustments to secure your financial future.


13. Preserve Inheritance


Protect any inheritance you receive during your marriage by consulting with a legal expert on potential asset division. Things like co-mingling an inheritance with marital assets can complicate matters.


14. Negotiate Wisely


Engage in fair negotiation practices and consider mediation to reach mutually beneficial financial agreements without costly legal battles.


Read How To Get The Outcome You Want From Your Divorce Negotiations for a detailed breakdown of what to do during your negotiations.


15. Be Mindful of Capital Gains


Have property acquired during your marriage? Understand the tax implications of selling assets post-divorce to avoid unexpected capital gains taxes.


16. Account for Hidden Assets


While there is big talk about the possibility of spouses hiding assets, more often that not it isn't the case. Thankfully divorce attorneys are skilled at uncovering hidden assets, ensuring a fair division of property during divorce proceedings.


Watch this mini-masterclass on Uncovering Hidden Assets for insights from a divorce forensic accountant on ways to find money during divorce.


17. Update Your Estate Plan


Revise your will, trust, and power of attorney documents to reflect changes in beneficiaries and asset distribution post-divorce. Earmark funds for this!


18. Seek Professional Help


Working with professionals like The Divorce Planner founder and divorce prep coach Alex Beattie is a great investment to navigate the emotional and financial challenges of divorce effectively.


19. Evaluate Spousal Debts


Determine responsibility for joint debts and work towards resolving them to protect your credit score.


20. Leverage Support Services


Utilize community resources and support services to ease financial burdens and emotional stress during divorce.


21. Document Communication


Keep records of all financial communication with your ex-spouse to prevent misunderstandings and conflicts.


22. Assess Housing Options


Evaluate housing choices based on affordability and long-term financial sustainability post-divorce.


23. Review Prenuptial Agreements


If you have a prenuptial agreement, review its terms and implications with your attorney to understand its impact on asset division.


24. Monitor Financial Accounts


Monitor joint accounts closely to detect any suspicious activity or unauthorized withdrawals.


25. Understand Division Rules


Familiarize yourself with state laws governing the division of assets and debts to protect your financial interests.


26. Plan for Child's Education


Include provisions for your child's education expenses in your divorce negotiations and financial planning to secure their future. Do you have a college account set up? If not, consider starting now.


27. Seek Reliable Legal Counsel


Choose a reputable divorce attorney with experience in handling complex financial matters for optimal guidance. Download 24 Question To


Read the post What To Expect When Meeting With Divorce Attorney for insights on how to choose the right person to represent you.


28. Create a Post-Divorce Financial Plan


Once you have an accurate assessment of your current financial realities, project how they will change and develop a comprehensive financial plan for life after divorce, considering your income, expenses, and financial goals.


29. Prioritize Your Well-being


Invest in self-care and well-being to maintain mental and emotional balance during the divorce process. It benefits you in many ways, including putting you in the best position to make smart choices during divorce.



30. Understand Your Credit Score


Having good credit after divorce can mean the difference of a short term financial dip and long term. Monitor your credit score regularly and take steps to improve it if necessary to access favorable financial rates and opportunities.


31. Update Offline and Online Accounts


Update your personal information on all accounts, including social media and subscriptions, to reflect your new status post-divorce.


32. Allocate Emergency Funds


Set aside emergency funds to cover unexpected expenses or financial setbacks that may arise during or after divorce.


33. Plan for Unforeseen Events


Prepare for unforeseen circumstances by having contingency plans in place to protect your financial stability.


34. Stay Informed on Tax Regulations


Stay informed about changes in tax laws that may impact your financial situation post-divorce to make informed decisions.


35. Consider Mediation


Explore mediation as an alternative dispute resolution method to save time and money in the divorce process. This Step-By-Step Guide To Prepare For Divorce Mediation is a great place to start.


36. Safeguard Your Children's Financial Future


Ensure your children's financial well-being by prioritizing their needs and planning for their future expenses.


37. Embrace Financial Independence


Going from a two income household to one, or securing work out side of the home after being a stay-at-home parent can feel especially daunting. Empower yourself with financial knowledge and independence to make informed decisions about your financial well-being.


If you haven't been the primary person respoinsible for financial decisions during your marriage don't stress. Today is the perfect time to start learning how to drive your financial literacy and independence.


38. Celebrate Financial Milestones


Acknowledge and celebrate financial milestones achieved post-divorce, no matter how small, to boost your confidence and positivity. Every small step is a BIG wiin.


With careful financial planning and expert advice, you can navigate a divorce with confidence and resilience. Whether you're just starting the divorce process or in the midst of it, remember that your financial well-being matters, and with the right strategies in place, you can emerge stronger and more financially resilient than ever before.



Commenti


bottom of page