Financial Planning for a Divorce: What to Consider

Divorce is a tough process — both emotionally and financially. Financial planning for a divorce is essential early in the process because separating two people’s money and accounts can be difficult and messy. Additionally, you’ll want to have a plan in place to make sure you’re prepared for the future.

It’s important to note that each divorce is unique, so for advice specific to your situation, we recommend speaking with experts familiar with your case. However, the tips below will help point you in the right direction and provide information to get you started.

Contested vs. Uncontested Divorces

The average cost of a divorce is $15,000-$20,000. However, this isn’t a one-size-fits-all cost that applies to each situation, and whether or not your divorce is contested can impact the cost.

Contested Divorces

These can be much more expensive and complicated. In a contested divorce, there are disagreements around child custody, property distribution or other terms of the divorce. Therefore, the parties involved rely on the court to determine the outcomes.

Uncontested Divorces

These can be much cheaper and quite simple. There are two paths to an uncontested divorce, but it can be hard to predict if a divorce will be uncontested until entering divorce proceedings. First, the spouses agree on the divorce terms, such as division of marital property, child support, custody, visitation and division of shared debts. If the couple agrees to these terms, they’ll submit a statement to the court confirming everything they’ve agreed on.

The second pathway to an uncontested divorce is if one of the spouses files for divorce and requests specific things, such as ownership of the house or child custody, and the other spouse doesn’t respond or appear in court. In this case, the court decides if the filing spouse receives what they requested without input from the other spouse.

Financial Planning for a Divorce: What to Consider

This time can feel overwhelming, but focusing on the following considerations while doing financial planning for a divorce can help you prepare to successfully transition to what comes next.

Be Wary of Advice

No one knows your situation better than you, your partner and your attorney. While articles such as this one can point you in the right direction, it’s best to seek an expert’s advice before you make any financial moves.

Track Your Current Expenses and Plan for Future Ones

Start tracking your household expenses (if you don’t already) and anticipate what expenses you’ll have in the future, such as moving. This is vital information for your attorney and will help you create a more accurate budget later. Some expenses to consider when calculating your new living expenses include:

• Mortgage or rent
• Health, auto, rental or house insurance
• Home maintenance costs
• Food
• Utilities
• Car maintenance
• Telephone
• Medical expenses
• Childcare expenses
• Income tax
• Pet care

Gather Your Financial Records

Grab your checking and savings account statements, retirement account statements, credit card statements and income tax returns, along with a list of your assets. These documents portray the financial health of your marriage. It can be quite time-consuming and tedious to gather these records, so we recommend starting as soon as possible.

Avoid Making Big Financial Decisions

It can be tempting to start making changes to your beneficiaries and accounts. However, keep in mind that all of this will be sorted out during the legal proceedings.

If you start making these moves before then, the judge could award your partner as well as file criminal contempt charges against you. If you’re unsure about a particular financial move, it’s best to seek the advice of your attorney.

Keep Finances Transparent

While you are still married, it’s important to keep financial matters transparent with your spouse. It’s also important to be conservative with how much you’re spending and saving.

Dipping into your accounts too much can be detrimental to your situation. However, you can still use your accounts as usual for necessary expenses. If your relationship with your spouse isn’t amicable, consider asking your attorney for a legal separation, which dictates how much money you can both use until the divorce is final.

Preparing for the Road Ahead

During a divorce, you have to figure out how to best separate your finances while keeping each other as whole as possible. Explore our helpful financial resources on divorce to prepare for the upcoming changes to your finances.