Why are these three divorce financial steps so important? Divorce has a way of messing with a person’s head. By the end, even the most intelligent and sensible person can be turned into an emotionally charged, confused basket case. (Click here to find ways to ways to combat the Emotions Rollercoaster). You try so hard to keep it together… but you know this is not one of your finest hours deep down. It seems almost impossible to sit down and thoroughly organize and plan your future. Brain fog has almost paralyzed you from moving forward.
What should you do?
Well, the first thing is, to be honest with yourself.
No One Expects You to Know Everything
The first of the top three divorce financial steps is to figure out your blindspots. What is your role in the family finances? Do you handle the day-to-day bills and expenses? Are you in the loop with all of your investment accounts and retirement plans, or have you been kept in the dark?
If you’re currently in the dark, it’s time to turn the lights on! And fast.
Divorce is centered around your finances, so you need to be in the know. If you and your spouse are on friendly terms, it’s a good idea to get statements for all of your asset accounts, as well as recent tax returns from them. Once you have this information, you can take it to a Certified Divorce Financial Analyst (CDFA®), where they will organize it and give you the rundown on everything you have. A CDFA® is specially trained in the financial aspects of divorce, so they will help you move past the brain fog and proceed with your divorce.
What Happens Next?
The next of the divorce financial steps is to take time to think about the next phase of your life. It can be tricky, especially if you’ve never sat down to plan your future before. And the fact that you’re grieving at the same time doesn’t help. But with a bit of perspective, preparing for what’s next can actually be FUN. You have a chance to start from scratch and do things that you might not have done still married. Is there anything you used to dream about that never happened? Is it time to go back to school? Do you want a new place that’s more suitable for your new life?
Now may be the perfect time for whatever you dream of! Just be sure to keep your finances and budget in mind, so your dreams don’t become bigger than your wallet.
Rebuilding Your Financial Identity
When you’re married, most accounts like credit cards, mortgages, and loans are in both person’s names. Now that you’re getting divorced, you’ll have to convert or close all those accounts. Your credit may not be as strong once you’re officially divorced, so you may want to get things in place while you’re still married.
The first thing you should do is open a checking and savings account in your name. This will help establish your own financial identity. Next, find a credit card with good rewards and apply for it in your name. You want to make sure you have access to credit during your divorce in case you need it for legal fees and other expenses.
While these steps seem small, they are practical and valuable first steps. They get your mind focused on your finances and keep your eyes on the future! You can get through your divorce; you just need a little advice and professional help. A CDFA is a great place to start – Let them work with you to create a strategy that works for you.