Saying divorce can mess with your mind is a substantial understatement. I know because I have been there. It is as if my brain was removed from my head and placed beside me for about a year. (It does come back!) The intelligent together woman I once was turned into an emotional, brain-fogged, unorganized basket case. If you are in the middle of a divorce you may be able to relate.
So how do you navigate your financial future in the midst of a trauma induced brain fog? We have a few tips to help you do just that. Follow these 4 steps to a successful financial future and know the brain fog does lift!! There is hope and light after divorce -hang in there.
1. Know the Basic Finances of the Home
What’s your role when it comes to the family finances? Do you handle the bill paying? Are you “in the loop” on all your bank accounts or are you in the dark? What about investment accounts or retirement plans? Do you have any? If you’re in the dark, you need someone to help you turn the lights on – and FAST! This is where a Certified Divorce Financial Analyst or CDFA® practitioner can really help.
Has your spouse blocked you from your financial life? If so, a CDFA® may help you shed light on the situation. A good CDFA® or a forensic accountant can walk through your taxes and identify brokerage and bank accounts. He or she can also walk through any financial statements you have and help you identify where assets may be hidden. There is help available – you do not have to stay in the dark. One client brought in a box of papers from years of stuffing them in drawers and closets. We found 3 rent houses and $100,000 in CD money!
If you and your spouse are cooperative, ask for statements on all your asset accounts and the last 3 years of tax returns. A CDFA® professional is specially trained in the financial aspects of divorce and will be your best friend in this process!
Conversely, if you are the spouse in the know financially, gather the most recent statement on every asset and every debt account you own and create a spreadsheet listing the type of account (IRA, brokerage, bank, etc.), the owner (who is on the title), the last 4 of the account number, the date and the value as well as the last 3 years of tax returns. This will help your attorney or your CDFA® practitioner understand the overview of your estate in a more efficient manner.
2. Know what you Spend in a Given Month
We fully understand the “B” word can be an awful concept (yes, budget) but in divorce it is particularly important to know what it cost you to live in a given month. You will want to know what type of lifestyle you will have after divorce and where those funds will come from. Honestly, the pain of going through the process of looking at your monthly bills and monthly spending on life can provide great peace of mind. After you look the costs of living, you can then look at options for income – child support, spousal support, employment income, investment income or even guaranteed sources of income like social security of your ex-spouse, annuities or cash value life insurance. Again, a CDFA® practitioner can play a critical role in helping you find emotional peace of mind.
3. Build A Single Identity for Yourself
Often through marriage all the credit cards, mortgages, loans, etc. are in the names of both spouses. To begin the process of establishing your own financial identity, open a checking and savings account in your own name (with your attorneys’ approval). Next, find a good rewards credit card to apply for in your name alone so you will be assured of having access to credit after the divorce. This is critical! While you are married you can use the marital income for credit card applications. Be sure to put some things in place while you are still married because after the marriage is over, your credit picture may not be as strong.
4. Think About Your Future
This part may be hard but try to start thinking about your future. Unfortunately, this happens at the same time you are grieving what you THOUGHT the next phase was going to look like. But if you allow yourself some space, it can be healing and fun. You now have the chance to start over again. This will help your mindset as you negotiate through the divorce finances.
What did you once dream of? What dream of yours was lost during the marriage? Is it time to go back to school? Maybe a cool downtown loft condo should replace that huge family home you had to keep clean. Whatever you dream of, you will need your budget and financial picture top of mind. That way, if your dreams outsize your wallet, you have some serious planning to do! A good CDFA® can help you figure these things out and help you create a plan for your new life.
These steps may seem small, but they are valuable first steps to get you thinking financially and looking out for your future. You can get through this, and a little divorce financial planning help from a CDFA® friend is a great place to start. Schedule your 30- minute complimentary consultation to discuss your financial planning needs today with Denise French at www.DivorceStrategiesGroup.com.