Following on from her blog on the main financial challenges people face when going into a divorce, Jodie Phelps, leading financial adviser discusses her top 10 tips for being financially prepared for your divorce.
Top 10 tips on how to be financially prepared for divorce
Being financially prepared for a divorce involves several key steps to ensure you have a clear understanding of your financial situation and can navigate the separation smoothly. Here’s what you need to focus on:
- Understand Your Current Assets
Know what assets you have, their value, and what’s in place. Gather relevant documents such as bank statements, investment account statements, insurance documents and tax returns.
- Know Your Joint Incomes
Be aware of all sources of joint income. This includes salaries, rental income, dividends, and any other streams of revenue. Understanding the total income helps in assessing the financial situation post-divorce.
- Manage Your Outgoings
Stay on top of your expenses by reviewing and cutting out unnecessary costs. Ensure you are not paying for subscriptions you no longer need. Regularly review and update your budget to reflect current expenses.
- Understand Joint Liabilities
Know all the debts and liabilities you share with your spouse, including mortgages, credit card debts, and loans. This understanding is crucial for fair division and repayment planning.
- Ensure You Have a Personal Bank Account
Ensure you have a bank account in your own name. Joint accounts can be frozen during separation, so having a personal account is essential for financial independence and security.
- Build an Emergency Fund
Create a savings fund to cover any unexpected expenses that may arise during the separation process. This financial cushion can help you manage unforeseen costs without added stress.
- Improve Your Credit Score
Review your credit report and work on improving your credit score. Establish credit in your name if you haven’t already. A good credit score is vital for securing loans, renting property, and other financial activities post-divorce.
- Check Beneficiary Designations
Ensure that the beneficiary designations on your financial accounts, insurance policies, and retirement plans are up to date. These will need to be amended on divorce.
- Develop a financial plan
Make a plan that outlines your short-term and long-term goals. Include budgeting, saving, investing, debt management, and retirement strategies.
- Consult a Financial Adviser
A financial adviser can be part of you support network throughout divorce. They can help you understand the financial implications of divorce and assist in planning for your future.
Jodie is a leading financial planner with over 12 years of industry experience. She is passionate about helping her clients achieve their life goals. She takes away the stress of financial planning and breaks down the complexities of the financial world.
You can find out more about Jodie via her LinkedIn.
Useful links
“I want a divorce but I don’t think I’ll survive financially”
Can I get divorced when I’m in debt?
How is debt divided on divorce?
