By Laurel Buchanan, CFP®
Divorce is a difficult and emotionally draining process—no matter how long or short the marriage was. On top of that, it can be hard to navigate the legal and financial aspects of divorce without taking a step back to consider the big picture. Before you dive into the process, take a moment to consider these tips to help prepare you for the transition. No matter the circumstances, it is important to stay level-headed and make decisions with your future in mind.
Don’t Rush a Divorce
First and foremost, don’t rush the divorce process. There are so many difficult decisions to make: property division, child support, parental responsibilities. Each one of these decisions has a long-term impact on your emotional and financial well-being.
Take a deep breath, and take your time making each decision. I even tell my clients to remove their emotions from the equation and think of each decision as a business transaction. This may sound cold, but emotions are at an all-time high during a divorce. It’s critical to calm these emotions and make decisions as rationally as you can.
Get Organized
Getting organized before a divorce can help minimize stress and reduce the chances of running into problems down the road.
Start by making a list of all your assets, liabilities, and financial accounts, including:
- Bank statements
- Insurance policies
- Investment accounts
- Estate planning documents
- Tax returns for the past few years
- Retirement account statements
- Loan documents
- Real estate deeds and car titles
You’ll need to gather these items and give them to your attorney. It may also be helpful to divide them up into marital property (i.e., assets and debts obtained during the marriage) and non-marital property (i.e., assets and debts obtained before or after marriage).
Know Your Cash Flow
Even if you anticipate having a considerable net worth after divorce, it’s important to know what your cash flow will look like moving forward. You don’t necessarily need to budget and track every expense, but you do need a clear idea of how much money you’ll have coming in each month.
Write down your income, including your salary, alimony, child support, dividend income, and so on. Then write down all of your expenses. (Don’t forget one-off expenses like property taxes and private school tuition that may not show up on your monthly bank statements.)
Seeing these numbers in writing will help you get comfortable with your new cash flow and help you prepare for any unexpected expenses.
Plan Ahead for Post-Divorce Life
Life drastically changes after divorce. Instead of dividing financial tasks between the both of you, you become solely responsible. Now is a good time to start:
- Making a legal name change
- Updating all assets, documents, and liabilities
- Changing beneficiaries and emergency contact information
- Setting up a filing system to keep tax records, investment documents, insurance policies, and legal information organized
Be Gentle With Yourself
No matter how amicable you try to make it, divorce is messy. It’s emotionally, physically, and financially draining.
Go easy on yourself. You may be in a fog right now—and that fog may last for quite some time. Seek therapy or counseling if you need to. Do whatever it takes to protect your mental and physical health.
Lean on Your Advisor
Going through a divorce is an incredibly challenging time, and having a strong support system is essential to help you manage the ups and downs. A trusted financial advisor can be an important part of that support system, offering informed and objective advice. They can help you clarify any issues of concern or confusion, and provide the comfort and confidence you need to make the right financial decisions.
If you are looking for a financial advisor who understands your unique needs and can help you through your divorce, ABLE Financial Group can help. Our team of financial planners specializes in divorce-related issues and would be honored to join your support system. Give us a call at 480.258.6093 or email laurel@ablefinancialgroup.com to get started.
About Laurel
Originally from a small town in North Carolina, Laurel is a graduate of the University of North Carolina at Charlotte, where she earned a degree in Communications with a focus in Public Relations. After earning her degree, Laurel went on to start her career as a Financial Advisor with Edward Jones. Laurel holds the Series 7 and Series 66 securities registrations, as well as an Arizona Life Insurance License and is a CERTIFIED FINANCIAL PLANNER™ Professional. She works closely with 401(k) plans and their participants, as well as divorcees and widows.
Laurel currently lives in Scottsdale and enjoys hiking, hosting dinner parties for friends, and traveling whenever possible. She also volunteers as a “big sister” for Big Brothers Big Sisters of Central Arizona. To learn more about Laurel, connect with her on LinkedIn.
