How to Handle Financial Planning During a Divorce


A divorce comes with many changes to a person’s life, most significant of which emotional and financial changes. Unsurprisingly, untangling two people’s money is never easy. During the divorce, the couple goes from having a combine household normally with two separate incomes, to living independently and supporting themselves on their own.

So, long before you set up your post-divorce budget or child or spousal support is awarded, you have to prepare your finances for the tasks ahead. Of course, each divorce is unique and detailed advice can only come from experts that are familiar with your case. However, the following tips on financial planning during a divorce should point you towards the right direction.

  1. Create a Practical Budget

Assess your household expenses to determine your total weekly or monthly expenses. Aside from the normal expenses such as utilities, rent/mortgage, telephone, cable, groceries, etc., don’t forget to include other expenses such as child care, motor vehicle expenses, uninsured medical expenses, entertainment, vacations and holiday trips, as well as the educational costs for you and your kids.

Once you’ve created a budget, see what your income amounts to and what it’s likely to amount to at the end of the divorce. Make sure you account for any child and/or alimony support that you might have to pay or receive.

With a budget in place, you can now establish whether you might have to make any cuts in your budget, and where you can. Plus, you can figure out what assets might be the best to walk away with from the divorce as the marital assets are divided.

  1. Spend and Save Wisely

Much of the process of separating joint finances depends on the state laws. Some usually treat all income, debts and assets as a single pot. This would mean that dipping into the pot more than usual, or emptying that pot in the weeks before your divorce, it could be detrimental to your case.

In essence, you won’t gain anything from getting to the bank first, it’s probably even a disadvantage. Keep all your finances transparent as before, with your partner. Continue using your accounts, whether joint or individual, as you usually would. In case you don’t have money to hire a divorce attorney and other similar expenses, try to reach an agreement with your spouse about each spending a comparable or conservative amount. But if your relationship isn’t amicable, enquire from your lawyer about legal separation, which would stipulate how you can both use the money until the divorce process is complete.

  1. Gather your Financial Records

Your financial records ideally tell the story of the financial health of a marriage. Collecting these documents can be time consuming and tedious, so it’s best to start as early as possible. In case you and your partner shared any account, your financial advisors or institutions have no right to keep your requests confidential. Here are some of the documentation you can start with:


  • Past year statements for your savings and checking account(s)
  • Past year Investment account statements
  • Retirement account statements
  • Past year ledgers for any of your loans such as auto loans, mortgage, and personal loans
  • Recent pay stubs
  • Past year credit card statements
  • Past 3-years income tax returns
  • List of any debts and assets you brought and those that you’ve amassed since marriage


  1. Assess your Future Income and Assets

As part of your financial planning, it’s helpful to consider what your income will be after the divorce process is complete. If you have a day job, you already know what income to expect from work. But, you also want to consider if you will be paying or receiving alimony or child support. This is an important component when calculating your income.

All the marital assets are divided as part of a divorce. This includes all the bank accounts, retirement accounts, investment accounts, future inheritance, business interests, stocks, real estate, personal property, vehicles, and other assets owned by the spouses. As you negotiate the division of assets, consider your budget and your income. Would it be more beneficial for you to receive illiquid assets like real estate or liquid assets like investment accounts?

For example, keeping the marital home can offer some continuity, so that the children can continue living there. However, it won’t make cash available to you immediately. Plus, real estate can appreciate or depreciate, and you can’t get equity from the property until it’s sold. Bank accounts and other liquid assets will give you an access to money relatively quickly.

  1. Expect Resistance

Depending on your situation, the divorce may be amicable where there’s free exchange of information. However, in some confrontational situations, one of the spouses might refuse to release important documents unless they are forced by legal means. This is quite likely if one spouse had influential control over the household finances.

Although relations might appear cordial, it’s best to anticipate some rough patches. You can reduce the chances of a confrontational situation by gathering all of the important documents before filing. And if your spouse fights every step you make, consult your attorney about court-ordered options.




  1. Get Help When You Need It

Whether your divorce is confrontational or amicable, a divorce lawyer  can help you sort through the separation of your finances and your lives. Having a lawyer is not an act of aggression, and it shouldn’t be looked at that way. The specifics of a divorce are too tough to be negotiated at the dinner table.

In addition, based on the total value of your marital estate and the gross incomes of each spouse, it’s often wise to have a financial advisor to help through the divorce process. They can ideally provide guidance on budgeting, what assets to keep, and the tax consequences of divorce. A Certified Divorce Financial Analyst (CDFA) is a financial advisor who specializes in divorce and can offer expert advice through the process.

Eventually, hearts will heal, but if you make wrong, emotional financial decisions during the divorce process, your bank accounts probably never will. Make careful and well-calculated decision when negotiating your divorce settlement to avoid losing bother your financial security and your marriage in the process.


Please enter your comment!
Please enter your name here