5 Ways to Financially Prepare for Divorce

By: Rosemary Frank, MBA, CDFA, ADFA, CFE, MAFF
Last Update: November 01, 2016

Financial issues will dominate the discussion of your divorce settlement. Therefore, it makes sense to financially prepare for divorce. You are preparing not only for the actual expenses related to the divorce process, but also for the major financial adjustments that will follow. (For those of you who were looking for ways to hide assets, this is not where you will find it.)

Taking the following financial steps will help you be better prepared, financially, for the divorce process as well as the outcome. But remember, in spite of all your preparation, there will still be difficult times ahead.

1. Save money

Forego as many unnecessary expenditures as possible and save funds to pay for your divorce team of professionals: therapist, financial advisor, and attorney. You will need the assistance of these experts, who help people like you through divorce on a daily basis, just to understand what is happening to you and what to do about it. Divorce is like no other life experience, and to try to do without professional help is like trying to take out your own appendix.

2. Take care of delayed needs

This is going to seem in direct conflict with number one, and it may be. However, if you have been putting off some non-urgent medical or dental care, I suggest that you get it done before embarking on a process that will likely sap your strength and negatively affect your overall health. In addition, ask yourself why you may have been delaying taking care of yourself. If you have delayed things like home repairs or necessary replacement of a vehicle, better to do it before the divorce while the current household income is fully available. Remember, you and your spouse “wore out” these items during the marriage, so it is appropriate that marital funds are used to restore or replace that value.

3. Know your finances

However much you think you understand about your household finances, focus on knowing more. You will never know too much. The more you know, the better decisions you will be able to make regarding settlement. Collect all the documents you can: tax returns, payroll vouchers, bank and investment account statements, retirement plan and account statements, pension information, credit reports, mortgage statements, etc. Think about every dollar that flows into and/or out of your household and get some documentation to substantiate that. This seems ambitious, and it is, but just do the best you can. Your attorney and divorce financial advisor will help you with whatever may be difficult to obtain and/or understand.

4. Career preparation

Plan on ramping up your career or replacing your current “job” with a career. Whatever your circumstances, your household income is about to be reduced and you will need to enhance your earning potential. If you require additional education or training, plan on determining the funds needed for that and make it part of your divorce settlement negotiations. Your future financial well-being will depend upon your ability to be financially self-sufficient. A career with long-term growth potential is clearly different from a job, which may fill a short-term need for limited income.

5. Pay down debt

Seriously consider paying down any unnecessary credit card debt. If you have the funds in a checking account, or in an easily liquidated reserve, eliminate debt that is considered joint by a creditor because there will be no way to modify the ultimate responsibility for that obligation. It will remain shared in spite of who is assigned responsibility for payment as part of your divorce decree. Know that joint mortgages and vehicle loans will need to be refinanced individually. Determine if it might be easier to pay off the debt completely. In anticipation of closing all jointly-held credit cards, prepare by ensuring that you have at least two cards in your individual name that will survive the divorce.

Basic preparation for the impact of divorce will ease the financial shock of it all. By following these few simple steps, you will find yourself better able to cope with other unanticipated issues as well as be in a better condition to transition to your new life as a single individual.


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