If you are headed towards divorce, but aren’t quite there yet, how do you continue to manage your money when it is linked to your spouse’s? Getting familiar with your financial situation will help the process of dividing assets.
A thorny topic
Talking about money is difficult even in the best circumstances, but it can be especially uncomfortable when you have to talk about money with someone you might not be on the best terms with. Keeping a dialogue open can be hard, but it will be better to come to an agreement than have a drawn out conflict ultimately decided by the court. While it is challenging to keep your emotions out of these conversations, you need to be thinking financially not emotionally.
A plan for action
There are steps you can take to make the process of dividing assets more straightforward.
- Create a budget. Your financial situation is about to change. The household money will now be used to maintain two homes, instead of one. A budget can help address these increases and possibly highlight areas where expenses could be reduced.
- Get separate bank accounts. Until you are divorced, most money will still be considered marital money, but having separate bank accounts will allow you to spend money without having to answer for every transaction.
- Do not go on a spending spree. As mentioned, funds are still considered marital money and making a large purchase should be a joint decision. Even mundane household purchases out of a joint account could be contested later on so it is better to avoid large purchases if possible. Racking up charges on a joint credit card is also off limits.
- Check your credit. Obtain your credit report from all three credit reporting agencies. It will help you identify anything that you were not aware of and serve as financial barometer. If large charges appear after you pulled the report, the court could order the spender to repay them.
- Divide your debt. Unfortunately, debt is joined even after you divorce so having a plan for repaying debts is practical. You do not want to find out from a collection agency that your spouse stopped paying a joint credit card bill.
Get everything in writing and have a written record of who will pay what. If you are splitting joint debt, consider a provision that will protect you if the other spouse stops paying and creditors come after you.
A well planned financial agreement can aid the divorce process and protect your interests. You owe it to yourself to be proactive about your future, so take steps today to start preparing your finances for divorce.