Keeping Your Divorce On Secure Financial Footing.

Marke sure you find the right lawyer and process.

Think about which process is right for you and the needs of your family.  Then, find an attorney who will meet those needs and who you feel comfortable with.  Look for someone responsive and confident, but not overly inflammatory (as that will increase your emotional and financial costs). 

Make sure you are not overspending.

Until a settlement is reached, avoid making major changes to your financial situation—do not accumulate credit card debt or make impulsive purchases. Protect your credit score by obtaining a credit report that shows all accounts under each name (including joint accounts you may have forgotten) and prioritize paying at least the minimum monthly balance on these accounts. Remember: joint accounts affect the credit scores of BOTH parties.

Understand there is compromise

Many people waste a lot of time and money (which negatively affects both parties and the children) arguing over minor items like specific appliances or pieces of furniture. In the grand scheme of things, these usually do not matter, but people often lose sight of that and end up financially harming themselves in the long term.

A Budget is Your Best Ally

Build your budget around necessities rather than desires. Develop two separate budgets: one for pre-divorce and another for post-divorce. Take into account your income sources (such as salary and investment returns) and expenses (including check registers, credit card statements, taxes, insurance payments, and ATM cash withdrawals). Additionally, thoughtfully evaluate the differences between the two budgets, including potential child or spousal support and marital property considerations.

Consult an expert

Consulting a Certified Divorce Financial Analyst (CDFA) or Certified Financial Planner (CFP) can help you understand what you will need from a settlement—both immediately and in the long term. A financial professional can provide clarity about your current and new financial situations and identify areas for compromise in a divorce settlement. They can also explain the long-term implications of a settlement: what is taxable, what isn’t, whether the tax changes put you in a new bracket, potential fees, and new costs to consider. They can also ensure you account for all assets and liabilities (timeshares, pensions, stock options, pre-paid dues, season tickets, country club memberships, etc.) in your settlement negotiations.

Think before keeping the family home

Many people have an emotional attachment to the family home and cannot imagine living elsewhere. However, before insisting on keeping the home, determine if it is financially viable in the long term. A financial professional can help you project the expenses associated with maintaining the home and assess whether you can afford them in your new financial reality. Consider factors such as long-term equity, taxes, value, and maintenance.

Be prudent with settlement funds

People often mistakenly see settlement gains as “extra money.” The reality is that very few people can maintain the same lifestyle they had before the divorce. The same amount of money that once supported one household now needs to support two. It is wise to view gains within the context of your new financial identity and always save for emergencies or invest a one-time payout.

Your attorney is not a therapist

Attorneys are generally not equipped to handle the emotional factors underlying a divorce. Not only will they be unable to provide adequate help, but you will also increase your legal expenses. eone who can help distinguish between emotionally driven wants and tangible needs during a time when rational decisions are required that will impact your life and that of your family for years to come.