Managing finances is never an easy task and a divorce can complicate matters further. Although a divorce can cause emotional distress in a person’s life, it can also place a burden on your finances. In order to ensure that your finances have the best possible outcome, it would be wise to rely on professional help and advice to establish a plan.
If you are getting divorced, then here are 5 tips to help you manage your finances during the difficult time.
Keep Track of Expenses and Income
Although this is a good idea in general, it can be particularly crucial during the difficult times of a divorce. It’s helpful to track and document your financial details, and this includes payments made to your ex-partner, child support, and other expenses. Many people believe that tracking your personal finance can be rather tedious, however, it doesn’t need to be a difficult task. There are several ways to track and document these details, such as using personal finance apps.
Close Joint Credit Accounts
In the case of divorce, if you have joint credit accounts or loans with your ex-partner, it’s important that you contact your bank or loan provider to explain your situation.
You may also ask your bank to change the way the credit account is set up so that any money withdrawals or account freezing are agreed by both parties. However, please be aware that if you do freeze your credit account, you will need agreement from both parties to unfreeze the account. This may cause difficulties if your ex-partner is unwilling to co-operate.
It’s crucial that you stop accumulating debt in both of your names as it could continue to accrue joint debt. This may end up hurting both of your credit scores and credit reports, which may further complicate the process of divorce.
Develop a Budget
Creating a budget at this point is extremely important, especially if you are transitioning from a two-income household to a single income household. Without appropriate budget management, you may be faced with additional financial stress on top of the difficulties of a divorce. When you develop your budget, you should outline every expense, including daily and monthly expenses, whether it’s your mortgage, utilities, groceries, car payments, and so on. You should also consider budgeting for long-term expenses such as tuition funds and retirement. By planning a budget at this point, it can help you adjust to your financial situation and avoid overspending.
Understand the Management of your Finances
In a lot of marriages, there is usually one spouse that acts as the financial manager. They are usually involved with the management of the bills, setting the budget, filing annual tax returns, investments, budgeting, insurance, and so on. This spouse will have the experience and knowledge to make this an easy transition, however, the spouse that hasn’t been involved in the financial management may have a more difficult transition.
If you are not the spouse that handles the finances, then it would be wise to get help and advice from a certified financial planner to make this an easy transition. It may also be helpful to sign up for an online course on basic financial management to get you on the right tracks.
Establish Your Own Credit
Once you are divorced, you may find that your credit score has been affected due to the removal of your name from the accounts. You may also lose some of your established credit history because of this. Although it is not advised to accrue new debt after a divorce, you may be able to benefit from establishing new credit by getting a credit card in your own name and opening up a new bank account.
You may also want to consider establishing a savings account as every little amount saved can be helpful in the long-term. It may seem counter-productive to save money during a difficult financial time, but you never know when an unexpected expense might crop up.
Contact Us for Divorce Solicitor Services
If you’re located in the West Midlands or the surrounding areas and you would like advice or help from our expert family solicitors, then please get in touch with us. We can provide professional family law services and discuss your situation and needs.
Call us on 0121 356 4556 or you can email us at firstname.lastname@example.org. We’re always happy to help.