While no one expects divorce to be easy, many people are caught off-guard by the financial strain marital dissolutions take on both partners. In the U.S., divorce and separation are among the most common reasons people go bankrupt. In addition to legal fees, many individuals must pay alimony or child support payments on a single person’s income.
However, by taking steps to prepare your finances for the next chapter of your life, you can avoid the common financial mishaps that often come with divorce. Here are three ways to keep your finances on track during your split:
1. Keep track of your expenses
In divorce proceedings, a judge will decide how to divvy up your debts and assets and whether or not to award alimony or child support. Tracking your household income and expenses will be necessary for your case and for establishing your post-divorce budget.
2. Gather your assets
Divorce involves a great deal of paperwork, so you’ll want to start gathering a list of your financial records and assets as soon as possible. The financial documents you’ll want to prepare can include:
- Recent pay stubs
- Checking account statements
- Saving account statements
- Investment account statements
- Ledgers for auto loans, mortgages or personal loans
- Income tax returns
- Credit card statements
- A list of debts
3. Seek professional advice
The longer you’ve been married, the more complicated it can be to untangle your finances from your ex’s finances. If you are unsure of what steps you need to take with your money before your divorce, a family law attorney can help you determine the right move. You may also consider consulting with a financial analyst on how your divorce will affect your future financial health.
While the overall cost of divorce will vary by case, the expenses can start to add up quickly the longer the case goes on. However, by taking inventory of your assets and establishing a post-divorce financial plan, you can ensure you start the next phase of your life with your finances in order.