When people get divorced they are usually so preoccupied with just getting through it that they often don’t think about the finances until their attorney brings it up. This is super interesting because for the stay-at-home parent, financial freedom is a major fear. It’s also a big fear for the main breadwinner. Oddly even if both parents work they’re going to have some fear about finances. Thinking about your needs versus your wants, and breaking down those needs in advance is going to help tremendously in reducing the fear.
If you have not done so already you will want to get a bank account in your own name. Healthy marriages are characterized by each partner having individual accounts as well as a joint account. Interestingly often in the divorce process, we find this is not so. The first thing you want to do whether you’re getting divorced, or preparing for divorce is to establish your own bank account. You’re going to need it one way or another!
Consider how much money you need for needs. Needs are things like a roof over your head, food on the table, clothing on your back, etc. You also may want to set aside some money for an attorney. Start putting money in that individual account for these things. You want at least 3 months’ worth of basic needs represented in this account plus legal fees if possible.
When you’re pulling the trigger you’ll probably going to want to pillage the joint account. Be fair when you do this, if you’re going to avoid cleaning it out please avoid it when preparing for divorce. Remember that every action you take will be viewed by the court. You’re going to need to explain why you did what you did. You’re going to want to represent your actions as being in the best interest of yourself and your children.
What’s Your Credit Rating?
While living on credit is not desirable, it is an option you always want to have. You’re going to want to check your credit score. This is your personal credit score, not your score combined with your partner. If you don’t have one it’s time to start looking for ways to create a credit rating for yourself when preparing for divorce. This takes time. It’s represented by things like auto loans and paying off debts on time.
Chances are you already have credit cards. If there are joint accounts, you’re going to want to open some individual accounts. You’re going to want to go through your credit score and clean up anything that reflects negatively on your credit rating. Making a plan is key here.
Paying loans and credit cards on time is vital to preserving your credit rating. Ideally, these payments should be going out automatically.
Financial documents are a major hurdle in the divorce process. The more work you can do in advance to organize them the better you’re going to feel during the divorce process itself. Anything that involves money is a financial document.
Here’s a list of documents that attorneys will typically ask you to pull together:
- Last 3 years of tax returns. Ball schedules in w-2s.
- Any household contributors pay stubs.
- All in any investments
- Bank account statements
- Retirement account statements
- Policy statements for any life insurance and/or annuities
- Mortgage statements
- Other outstanding loan statements
- Credit card statements
- Social security estimates (available at www.ssa.gov)
- For any business owned, P&L for the current year and previous three years
Your Own Mail & Email
Make sure you have your own email account that your spouse cannot access. Additionally, you may want to PO box if you’re not feeling secure about your spouse leaving your mail alone. We’re not saying that your partner is a snoop, we are saying it’s not uncommon.
Advisers, Helpers, Mentors
It is inevitable that you’re going to need some kind of help here. In all likelihood, you’re going to need an attorney. Possibly a mediator. You may need a therapist or a coach. You may need a financial planner or a money coach. Don’t be afraid to ask for help. This is a traumatic process second only to the death of a loved one. Get an idea of what this help is going to cost because it’s going to help you in the next step in preparing for divorce.
Create a Spending Plan
A spending plan is everything you’re going to need to spend money on. Separately as part of the spending plan, you’re going to write down everything you want to spend money on. In your own mind, it is important to separate these two things. Don’t risk fighting over “things” or lifestyle if possible. ” I’ve become accustomed to living in a certain style ” is the downfall of many a divorce mindset. The law will support you in maintaining a lifestyle if the money is there. However, it is not unusual when people get divorced for there to be less money available on an individual basis than there was when it was two people living together.
Start with all the expenses related to basic living, schools, doctors, vacation, clothing, and family events. Work your way out to party clothes, salons, and dream items. Consider the well-being of your family first always. Also, consider what are the tasks that your partner did that they won’t be doing while they live with you? How would these tasks be taken care of? If you’re going to be working, who’s going to be picking up? Dropping off? When a team breaks up, it raises a lot of “how too” questions.
While it’s easy to get hung up on blaming anger during the divorce process, there’s also a tremendous opportunity here. There’s an opportunity to dream a new future for yourself. Not only do you have the opportunity to dream, but you can act. Whether you are working now or working as a stay-at-home parent, the dissolution of your marriage is the opportunity to recreate your life. Think less about income and more about what’s going to fulfill you. The more fulfilled you are and what you do, the greater your reward.,