**Interviewer:** My partner and I have decided to get a divorce. How should we handle our finances during this process?
**Expert:** Navigating a divorce can complicate an already complex life. Financial issues tied to assets, debts, and potentially handling child support or alimony can arise, so it’s crucial to approach each step methodically to ensure everything is resolved smoothly.
While the process may take time, it’s important to remain patient and advocate for yourself, as every decision made will have significant implications.
Experts generally categorize financial management into three stages: prior to divorce, during the divorce, and post-divorce, with tailored recommendations for each phase to help safeguard your financial interests.
**Before Divorce**
When preparing for a divorce, it’s essential to take the time to thoroughly evaluate your financial situation.
Reid A. Aronson, a partner at the family law firm Aronson, Mayefsky & Sloan, emphasizes that understanding your family’s financial standing is critical. He recommends you ask yourself the following questions:
– What are the income levels of both you and your spouse? Which accounts do each of you use for your income?
– What are your monthly expenses? Which of these are fixed, like housing costs and private school tuition, versus variable expenses such as groceries, clothing, and vacations?
– What assets do you own, and which institutions hold these assets?
Aronson notes that uncertainty about your finances can increase anxiety, which may lead to poor decision-making, potentially affecting legal negotiations or settlements.
It’s also vital to gather this information independently, without relying on your spouse. Rachel Burns, a certified financial planner at True Worth Financial Planning, points out that couples on the brink of divorce are no longer on the same team, so expecting cooperation in sharing financial information may be unrealistic.
Next, considering seeking professional guidance is a wise step.
Sarah Jacobs, co-founder of the Jacobs Berger law firm in New Jersey, advises that once divorce proceedings are imminent, bringing in financial professionals to assist is prudent. Accountants and financial planners can provide significant support, especially when dealing with matters involving moving, selling assets, tax implications, and re-establishing credit. While divorce lawyers may offer valuable advice, they aren’t financial experts and may not effectively handle certain financial issues.
**During Divorce**
Once the divorce process begins, it’s essential to clearly understand what your priorities are.
Jacobs states that careful consideration and thoughtful decision-making are the best ways to address challenges. By calmly and clearly outlining what you truly want to achieve, you can set a direction to work through the legal system to reach those goals.
After establishing your objectives, it’s crucial to concentrate on the desired outcomes and actively participate in the process.
Burns cautions that divorce can be lengthy and taxing; however, you must remain vigilant about financial decisions made during this time, as they can have long-lasting effects on your financial future and are often irreversible.
This period is also an opportunity to start contemplating potential lifestyle changes that may be necessary.
Aronson highlights that many families experience increased expenses after a divorce, particularly when it comes to housing. For most individuals, the income that previously supported a single household will no longer suffice for two separate ones.
The sooner you can accept the changes and adjust your expectations, the easier it will be to navigate the divorce and move forward.
**After Divorce**
Once the divorce agreement is finalized, you can take a sigh of relief and begin shaping your new future.
As you transition to your new life, reassessing your financial goals is a great starting point, as these can shift dramatically during the divorce process. Burns mentions that these goals may include short-term objectives like buying a new car or a home, as well as long-term plans such as retirement.
After setting these goals, it’s important to develop a plan to achieve them.
Aronson advises that once you have a clear picture of your personal financial situation post-divorce, you can work with a certified financial planner to create a long-term financial strategy. This is particularly vital if your settlement includes obligations like contributing to your children’s college expenses—having a clear plan will help you meet those responsibilities.
He also recommends planning for 10, 20, and even 30 years down the line.
Managing a complex divorce and envisioning your new life can feel overwhelming, so don’t be too hard on yourself. Give yourself time to find your new rhythm.
Burns states that feeling lost about your financial situation after a divorce is completely normal. There’s no need to feel embarrassed about lacking financial knowledge; however, everyone must take responsibility for their financial future. Divorce can be an empowering time to take charge of your life and act positively.
