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Managing Your Money During a Divorce

Closeup of hands separating coins into two separate piles, signifying divorce.
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The emotional toll of divorce is tough enough without worrying about the impact it can have on your finances. It’s important, however, to be aware of how splitting up will affect your finances—short- and long-term. Here are some steps to take early on to protect both your money and your credit rating:

Close Joint Accounts

Joint accounts with your spouse—from savings accounts to credit cards—are both of your responsibility (you and your spouse’s), even after a divorce, so be sure to close them as soon as possible. If there are children involved, you may want to keep one joint credit or checking account open for shared expenses, but monitor it closely.

Monitor Your Credit Report

You are entitled to one free report from each of the three major credit bureaus each year, and you’ll want to take advantage of the opportunity these offer to guard against potential fraud. Visit, the only federally-authorized website for free credit reports; be on the lookout for new accounts an estranged or ex-spouse may have opened in your name.

Establish Your Own Credit

If you don’t already have accounts in your own name, it’s important to begin establishing a solid credit rating on your own, as it is the key to your financial life. Your credit score determines whether you’ll get a mortgage or car loan, allows you to get a credit card with a low interest rate, and has become the new litmus test for landlords, insurers, and even employers to see if you are reliable and responsible. Opening a credit card is a good place to start; just be sure to limit spending to what you can afford and pay off your balance each month.

Decide Whether You Want the House

Many people have strong emotional ties to a jointly-owned family home. But a home that was purchased with two incomes may be unaffordable when you’re on your own, so take a hard look at your post-divorce income and financial status before deciding how to divide joint assets. Understand that the rights to the house aren’t necessarily going to be split 50/50. Every situation is different and states often have unique laws. There could be a sizable impact to your taxes too. Consult with your divorce attorney or your Certified Divorce Financial Analyst (CDFA) to get a handle on what your share of the home’s value is anticipated to be.

Revise Estate Planning Documents

Your spouse is probably named as beneficiary in your will, and for your life insurance and retirement accounts, so you’ll want to update those and other documents right away to reflect your new situation. Don’t forget to also revise your living will or advance health directive, and change any powers of attorney that designate your spouse as a decision-maker for you.

Create a Budget

Even if one spouse is required to pay child support, it’s likely that both of you will be living on less money after the divorce. Avoid getting yourself into financial trouble later on by creating a budget that’s based on a realistic estimate of your post-divorce income. Remember, as a single person you’ll now be fully responsible for your own retirement savings and necessary insurance, so be sure to include those in your financial planning. If you have children, you may also need to determine how long-term goals like college planning will be addressed.

Track Child Support Expenses

If you have children, be sure to create a system—a spreadsheet’s a good idea—to track both child support payments and costs. This type of documentation can go a long way toward minimizing financial disagreements with your ex.

Collect all of Your Vital Information

Preparing a folder of all of your essential information—whether electronically or in paper form—should make navigating all the required paperwork and decision-making less stressful. Below is a checklist:

Keep copies of these documents:

  • Tax returns from the past five years
  • List of items in safe deposit boxes or storage
  • Proof of both spouses’ income, such as W-2 or 1099 forms
  • Statements from checking and savings account
  • Statements from investment accounts
  • Real estate and mortgage records
  • Home equity loan statements
  • Most recent property tax bill
  • Promissory notes
  • All insurance policies
  • Complete records for any businesses owned
  • Titles to any vehicles
  • Three most recent credit card statements
  • Statements for retirement accounts
  • Health insurance policies
  • List of personal property owned
  • Most recent property tax bill
  • A current household spending plan
  • Account statements for student loans
  • Account statements for personal loans
  • Most recent paystubs for both spouses
  • Medical savings account information
  • Statement on the mileage and condition for all vehicles

Should your name or address change, send these changes to:

  • Financial institution(s)
  • Lenders
  • Home, life, health, auto insurance provider(s)
  • Accountant/tax professional
  • Credit card companies
  • Investment account provider
  • DMV
  • IRS
  • Unemployment office
  • State tax board
  • Social Security Administration
  • Pension/retirement plans
  • Student loan providers
  • Mortgage company
  • Online business accounts
  • Credit bureaus
  • Titles or deeds that will be in your name
  • Veterans affairs

Source: Balance Financial Fitness

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CUNA 2021 diamond award trophy icon

CUNA 2021 Diamond Award Winner

Content Marketing

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