Divorce will be difficult.
Dealing with emotions, memories, friends, family members, lawyers, paperwork and everything else that is a part of ending a marriage seems like (and sometimes actually is) too much to handle for one person.
One of the most common mistakes we see our clients make when going through a divorce is entering the process without a clear understanding of their financial situation. Typically, a divorce results in your standard of living decreasing by 30 percent. In marriage, you’ve shared resources like a residence and health insurance. But now, each of you must supply these items for yourself. Women tend to be hit harder than men, since they are more often charged with being the primary caregivers of their children and their elderly parents and are responsible for the associated costs.
If you’re at a place in which you know divorce is inevitable, there are ways to prepare yourself and your finances even before you file the paperwork, which will make the process easier and won’t set off any alarms with your soon-to-be-ex-spouse.
1. Know if your state is fault or no-fault.
If the court system in your state is able to place fault on one of the parties in a divorce hearing, you need to be extra cautious during every step of the process.
2. Start reducing expenses and debt.
Cutting back with two incomes will better prepare you when you only have one to work with.
3. Ensure you are medically and emotionally fit.
The emotional and sometimes physical impact of this type of transition is difficult enough when of sound mind and body, but even more difficult if you are battling other medical issues at the onset. Best word of advice, put yourself first. Take care of yourself to ensure you are capable of making informed and sound decisions. You may also find that your insurance coverage might change following settlement, so scheduling wellness visits in advance is a wise choice.
4. Check your credit report.
Make sure everything is in order with your credit history and resolve any errors.
5. Go paperless.
Going digital with your financial documents makes it easier to organize everything you’ll need for this process. Store everything in the cloud or a personal electronic dropbox for easy access.
6. Assess your career path.
Will your current job offer you enough income to support yourself post-divorce? If not, start pushing for a raise or a promotion, or bring your resume up-to-date to begin a search for a better job.
Anyone about to make this transition in their lives should go in with a detailed plan and realistic expectations about the optimal outcome. But also prepare for unexpected chaos, as it’s a period wrought with emotion.
If you’re about to experience a major life transition of any kind – from marriage to divorce to the birth of a child to retirement – contact Wescott Financial Advisory Group for help in ensuring your optimal future.