IRAs, 401Ks, CDs, annuities, money market vs. checking accounts, and more… How financially literate are you? In today’s sea of options for places to invest and hold income and assets earned by a couple throughout their marriage, the prospect of divorce can add even more layers of confusion and anxiety for a spouse unfamiliar with these basic financial terms and concepts. How do you know you’re getting your fair share when you’re not quite sure where your money is or how these accounts work? If you are contemplating divorce, here’s how to give your financial savvy a boost.
1. Collect Documentation: Whether your divorce is in the far off future as a possibility or you are in the middle of the process right now, it’s never too late to get educated about your finances. Begin collecting and sorting through your bank statements to see what your accounts look like. [See our Financial Checklist for what to look for.] Do you have savings accounts? Checking accounts? What monthly deposits are being made into these accounts? Attempt to get a handle on your monthly budget and how it relates to the annual income for the household. Are investments being made? Do either you or your spouse have retirement assets or employer contributed savings plans?
2. Budget: If you anticipate moving out of the martial residence, begin thinking about your new lifestyle and what types of expenses will result from the move. Will you be paying rent? Will you be able to afford these new expenses on your current income, or will you need financial support from your spouse? If you wish to remain in the marital home, be sure that you can afford all that goes with that, including mortgage, insurance, maintenance and upkeep of the property.
3. Take Debt Into Account: It is also very important to understand your marital debts. Review your credit cards and get a copy of your credit report so that you can monitor any odd or unexpected charges. Also, attempt to build up your own credit, independent of your spouse, so that you can be prepared for credit check from potential employers or landlords.
4. Get Help: If you need to, speak with a financial advisor or tax professional if you feel overwhelmed. Some financial arrangements can be complex, especially in high-income or high-asset families. And, of course, speak with your family law attorney for guidance on distribution of assets and/or debts in the divorce.
If you or your spouse has filed for divorce and you are concerned about your marital finances or your ability to support yourself after divorce, please contact us to schedule your initial consultation with one of our experience family law attorneys.