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Tips on managing your finances during divorce

On Behalf of | Sep 6, 2023 | Divorce

Divorce is often challenging, especially when it comes to financial issues. That is why you must keep a clear head when making financial decisions, before, during and after the divorce process.

To keep your finances on the right track, there are a few tips to follow to help facilitate a smoother transition into your post-divorce life.

Create a budget

Establishing a realistic budget should be a priority in the lead-up to divorce. Develop a budget by listing all your income and expenses, including mortgage or rent, utilities, groceries, insurance and transportation costs. A budget helps you gain a clear understanding of your financial standing and allows you to make informed decisions moving forward.

Separate your finances

If you have joint accounts with your soon-to-be spouse, create separate accounts as soon as possible. For instance, open a new bank account and transfer your income there. Also, divide or close shared credit cards and loans to prevent any further financial entanglements.

Update your beneficiaries and estate planning

Beneficiary designations provide instructions on dividing assets for life insurance policies and retirement accounts. You must update designations before divorce to ensure your assets go to the correct beneficiary. Remember to update your complete estate plan to reflect your new circumstances.

Consider child support and alimony

Child support and alimony are other important considerations during divorce. If you are the custodial parent, you may receive funds to ensure proper care of your child. Some spouses can also receive alimony depending on the circumstances.

As reported by Forbes, the average cost of divorce in America ranges from $15,000 to $20,000, so it is important to manage your costs while going through a divorce. Additionally, your financial outlook is bound to change after the process is complete. By thinking about your long-term financial goals, you can look towards a more hopeful future.