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4 ways to financially prepare for divorce

On Behalf of | Sep 28, 2023 | Divorce

Divorce, while emotionally challenging, also brings significant financial changes.

To ensure a smoother transition, have a well-thought-out financial plan to better navigate upcoming changes in your life.

1. Assess your assets and liabilities

Begin by taking a comprehensive inventory of your financial situation. List all assets, including property, investments savings accounts, and retirement funds. Simultaneously, identify your debts, such as mortgages, loans and credit card balances. This clear snapshot of your financial landscape will serve as a foundation for equitable property division.

2. Create a post-divorce budget

Once you understand your financial standing, develop a budget tailored to your future needs and resources. Consider how living independently will impact your expenses, including housing, utilities, insurance and childcare if applicable. Establish a sustainable budget that aligns with your income post-divorce.

3. Prioritize financial goals

A divorce can disrupt long-term financial plans. Reevaluate your goals and priorities. Ensure you have a plan for retirement, emergency savings and any educational expenses for children. Adjust your investment portfolio and financial strategy accordingly to align with your new circumstances.

4. Protect your credit

Divorce can have a significant impact on your credit score, particularly if you have shared debts. Close joint accounts whenever possible to avoid any potential liabilities. Establish individual credit accounts to maintain and build your credit history. Regularly monitor your credit reports to identify and address any inaccuracies promptly.

Considering that 64% of couples claim financial incompatibility during a marriage, it makes it even more important to plan for the financial aspects of your new life after the divorce.

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