Divorce is a mentally and emotionally draining experience, and if not handled the right way, it can be financially draining too, for one or both parties. Taking control of your finances and managing them actively as you go through a separation and divorce is vitally important. Here are some tips to help you avoid financial disaster through divorce. 

Open Your Own Accounts

Many married couple co-mingle funds and share checking and savings accounts and credit cards. Open accounts just for yourself as soon as possible to begin establishing individual credit and to have a place for your money to go once it’s been legally separated.

Don’t be tempted to drain any of your shared accounts, even if you feel that you are entitled to the money. Leave this to your attorney to avoid unnecessary legal complications during the proceedings.

Make an Inventory of Your Assets

It’s important to identify which assets belong to you as the divorce proceedings get under way. Separate property will include anything you owned prior to the marriage, inheritances in your name, and gifts that were given solely to you. Items and money that were acquired during the marriage or were given to both of you are usually considered to be jointly owned and cannot be listed under separate assets. It’s the court’s responsibility to determine who gets what out of the marital property.

To effectively inventory your assets, take time-stamped digital photos of personal and joint property, especially valuables such as collectibles, artwork, antiques, or jewelry. This provides evidence of the asset in case it goes missing during the proceedings.

Establish a New Budget

Whether you were the breadwinner in your marriage or you counted on your spouse for most of the income, you need to establish a new budget now that you’re on your own. Your household income will likely change drastically after the divorce. You could be losing the main source of income or be faced with a largely monthly obligation for spousal or child support.

Many newly separated individuals underestimate both their expenses and their financial needs. Develop an initial budget based on your monthly income, then track every expense for the first three months on your own, reviewing the expenses at the end of each month. You’ll soon see if your initial budget is realistic and how it might need to be revised. Don’t ignore the need for savings or a rainy day fund to cover future and unexpected expenses. It’s critical to take a hard look at what you need to make ends meet as this might affect how much you ask for, and receive, in support.

Though no one gets through the process of divorce unscathed, you can lessen the financial blow by making smart decisions as soon as you know a separation is in your future. If you have questions about managing your money through a divorce or other life change (including marriage, arrival of a new child, or death of a spouse) contact us in Millville, New Jersey.