Divorce is expensive. According to Debt.org, the cost of divorce, per person, is $15,000. This number includes the cost of attorney fees, court costs and costs associated with hiring professionals to help with things such as child support, taxes and real estate.
Though the cost of divorce will vary greatly from person to person, the bottom line is that the whole process is financially draining. For couples with limited incomes, it can prove devastating. Regardless of a person’s financial situation, he or she should take steps to limit the financial stress as much as possible when the time does come to file. NerdWallet explores the top ways individuals can ready their finances for divorce.
Track spending, and anticipate future expenses
According to one certified divorce financial advisor, individuals who know that divorce is inevitable should begin tracking all their households’ income and expenses. This includes everything from reoccurring expenses, such as mortgage and car payments, to one-off expenses, such as vacations and appliance replacement. Not only will tracking expenses help future divorcees build their post-divorce budgets but also, it can prove handy when it comes time for the judge to divide assets or set child support.
In addition to tracking expenses from as far as a year or two back, individuals should anticipate future ones. Using an overview of past spending behaviors, a soon-to-be divorcee can anticipate the cost of living and/or raising children on his or her own.
Avoid making major financial decisions
Once individuals decide to file for divorce, many start to make major financial changes. Among other activities, it is not uncommon for parties to divorce to adjust account beneficiaries, withdraw money from shared accounts, open new accounts or even take on major debt. NerdWallet warns that not only might a judge undo these actions but also, he or she may find the person who made the changes in contempt of court.
Spend and save conservatively
Building off the above point, NerdWallet recommends that soon-to-be divorcees try to continue to use joint and individual accounts as usual, and to keep all financial matters transparent. Failing to do so could prove detrimental during the property division process. If a couple cannot agree to spend or save conservatively throughout the divorce process, the publication recommends that one or both parties explore the possibility of a legal separation until the divorce becomes final.
Most importantly, individuals who are about to embark on divorce should gather any and all financial documentation and familiarize themselves with household finances. At the very least, divorcees should gather statements from checking and savings accounts, investment accounts and retirement accounts; loan documentation; recent paystubs; recent tax returns; and credit card statements. They should also create lists of all debts and assets each party brought to the marriage, and that the couple accumulated together.
Divorce can prove financially stressful for even the well-off. The best thing individuals can do is prepare for the cost and take all steps to preserve their finances as much as possible.