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Financial Steps to Consider Before Filing for Divorce

January 12, 2024

As the new year unfolds, many of us embrace the mantra "new year, new you," reflecting on significant life changes.

For some women, this may include contemplating a divorce.

While emotionally taxing, it's crucial to prioritize financial preparedness in this decision-making process.

Here are my essential steps to consider financially before moving forward with a divorce.

1. Understand Your Marital Assets:  The first step in preparing for a divorce is to get a clear picture of your marital assets. These include joint bank accounts, properties, investments, and retirement accounts. It's essential to know what you own, what you owe, and the value of these assets. Make a comprehensive list of all assets and liabilities, ensuring you completely understand your financial landscape. Remember, knowledge is power, especially in divorce proceedings.

2. Review Your Credit Report:  Your credit report is a good indicator of your financial wellbeing and a critical tool for understanding where you stand credit-wise. Obtain a copy of your credit report from the major credit bureaus. This report will show you any joint accounts or credit cards in your name and your individual credit score. Identifying any discrepancies or unknown accounts is essential, as these could affect your financial stability post-divorce.

3. Establish Credit in Your Name:  If you still need to get credit in your name, now is the time to establish it. This can be done by opening a personal credit card or securing a small loan. Building your credit is crucial for your financial independence post-divorce. It will allow you to make purchases, rent or buy a home, and secure loans in your name only.

4. Consider Future Living Expenses:  Divorce often leads to a change in living arrangements and, consequently, in living expenses. Create a realistic budget that includes potential rent or mortgage payments, utility bills, groceries, transportation, and other personal expenses. This budget will give you a clear idea of your post-divorce financial needs and help you plan accordingly.

5. Gather Financial Documents:  Start collecting all relevant financial documents. This includes tax returns, bank statements, loan documents, investment statements, and insurance policies. Having these documents readily available will make the process smoother and ensure you have all the necessary information for legal and financial consultations.

6. Seek Professional Advice:  Hearing the advice of a Financial Advisor who specializes in divorce and has been in your shoes, can be invaluable. I can provide tailored advice based on your financial situation and help you understand and navigate the complexities of divorce finances. Additionally, consider seeking legal counsel to understand your rights and obligations. I can also refer you to my extensive network of allies who can help you prepare for this transition.

7. Plan for the Long Term:  Think about your long-term financial goals. This includes retirement planning, investments, children's expenses, and estate planning. Divorce may alter these plans, so it's important to reassess and adjust your strategy to align with your new circumstances.

8. Emotional Considerations:  Finally, recognize that divorce is not just a legal process but also an emotional one. It's okay to seek support from friends, family, or a professional therapist. Taking care of your emotional wellbeing is as important as your financial health.

While deciding to divorce is never easy, being financially prepared can make the process more manageable and set the stage for a more secure future. Use the new year as an opportunity to evaluate your situation, understand your finances, and take control of your future. Remember, this is not just about ending a chapter in your life but also about starting a new one with confidence and clarity. Book a consult with me, and I can help you make this first step a little easier.