Financial issues are one of the most common reasons that couples pursue a divorce nowadays. Whether they face significant financial struggles during marriage or frequently argue about spending money, there is no doubt that finances can be the root of a lot of stress for individuals.
And it is likely that stress will not end during divorce. The process of divorce can be costly, especially when spouses have to divide their financial assets. However, there are ways that divorcing spouses can prepare and protect their finances:
1. Take an inventory of your finances
Either before filing for divorce or early on in the process, individuals should take an inventory of their finances, including income and bank accounts, and track their spending habits.
Keeping track of one’s separate finances and assets helps individuals in two ways:
- It helps them determine one of the most critical factors of the property division process
- They can calculate what their post-divorce finances might look like
It is also helpful for individuals to do the same for their soon-to-be-ex-spouse’s finances, so they enter the property division process prepared.
2. Create a budget for the future
Making an inventory of one’s finances can help individuals maintain a budget that will help them prepare for their life post-divorce.
Financial struggles are common after divorce—particularly for women. This is because divorce often leaves individuals with around half of their assets after property division with only one income to support them instead of two. Even with spousal support, it can be difficult to adjust one’s finances to life after divorce.
That is why it is essential to be proactive and create a budget to preserve finances before and during the divorce proceedings.
3. Pay off and close joint credit cards
Divorcing spouses not only divide their assets, but they also divide their debt.
Individuals can reduce the liability of this debt and protect their credit score by paying off any remaining credit card debts and closing down any accounts they share with their spouse.
4. Keep your retirement in mind
Regardless of someone’s age when they divorce, they should consider how a divorce could impact their retirement savings. Individuals save up for their retirement nearly all of their adult life, and yet those savings are subject to property division in Washington.
There is no way to keep retirement assets out of property division, but individuals can take steps to preserve their retirement throughout the process of their divorce.