Going through a divorce is never easy and, for many, it can be financially devastating. Many marriages end in divorce and, in Colorado, it is no different. While reasons for the high rates vary, most people going through divorce proceedings are in danger of jeopardizing their financial wellbeing.
Financial tips for divorce
During and following your divorce, there are a number of tips to follow to help keep yourself financially stable.
- Get organized: Get your financial and other important paperwork in order beforehand so you know what assets you and your soon-to-be ex-spouse have. Maintain good organization after your divorce also.
- Maintain separate accounts: Close joint accounts and hold your money separately. Do not forget about safety deposit boxes, investment accounts and credit cards.
- Cut expenses: Calculate how much you need to cover your expenses each month and establish a budget based on your actual income. Set up a system to pay your bills automatically, if possible, so you do not accidently overlook payments. Forgotten bills can rack up fines and interest quickly and adversely affect your credit.
- Check your credit score: Check your credit report to make sure you have not overlooked any shared accounts and that your ex-spouse's unpaid bills are not affecting your credit score. If you changed your name after the divorce, you may find you no longer have a credit history.
- Plan for and establish long-term goals: If you have young children, now is the time to calculate how their education and long-term financial needs may be met. If you own a home, set aside savings for general maintenance and repairs. Money should also be saved if you need to replace an older car in the near future.
Unfortunately, these ideas are only the tip of the iceberg when it comes to planning for your new future. Even if you do not have children or dependants, or your children are already grown and gone, you still have decades of your life left to finance.
Adverse effects on retirement
With the rise in the number of Baby Boomer divorces, the financial aspects of divorce are having far-reaching effects. The pool of money that was to fund the couple's retirement must now stretch to cover two people living independently; a much more expensive prospect. As a result, many divorced people are forced to put off retirement to make up the shortfall on their retirement savings.
Many women who stayed out of the workforce to raise the children, may be at a significant disadvantage and must fight not only to have their current financial needs covered but their future needs as well.
The most important tip
If you are facing divorce, you need a professional who can guide you around the potential pitfalls you may face. Seek the advice of an experienced divorce lawyer who can help you with financial decisions, educate you about alimony and child support, assist with transferring assets and advise you regarding the timing and filing of your divorce.