The transition from marriage to divorce is a difficult process, especially when it comes to finances. In the United States, almost 50% of all marriages end up in divorce or separation. A marriage provides you with assurance and financial security. You might have had an elaborate system in place working for you where you split the bills equally or reached a plausible understanding.
If you’re headed for divorce, consider these financial tips.
Using an Online Budgeting and Tracking System
The use of an online tracking and budgeting system allows you to effectively and efficiently manage your finances after a divorce. Your spouse might have been the brains behind the budgeting and tracking of both your finances, but the divorce took away that privilege. The system ensures that you restrain yourself within the set budget. The tracking system gives you real-time and accurate financial information that determines your expenditure and decision-making. This will help you keep your finances in check post-divorce.
Maintaining a High Credit Score
Moreover, it is important to have your credit score checked in the bureaus. It is important to ensure that everything checks out before and after the divorce. Early detection and identification of loopholes and discrepancies will allow you to remedy the situation before it spirals out of control. A bad credit score can deny you the opportunity of renting an apartment, increase the interest rates of a loan you are servicing, and even prevent you from applying for a job.
New Heirs
Most married couples are each other’s beneficiaries. Therefore, it is important to effect the necessary changes in a timely manner once you decide to go separate ways. This prevents your spouse from gaining access to your property and assets in case you pass away. In the United States, 71.6% of the population has not updated their will. Renaming your beneficiaries is a simple process that can be done by a lawyer. You can use a lawyer to draw up a will that indicates how you want your property and assets to be distributed among your beneficiaries when you’ve decided to divorce.
Update Your Insurance
Furthermore, when you part ways with your significant other, it only makes sense that you update your insurance coverage. You should ensure that you notify your insurance broker of the changes, especially with medical, car, and homeowner’s insurance changes. Ultimately, you end up saving money by splitting the coverage. During a divorce, you split the assets and property; if you do not make the changes on the coverage, you end up paying expensive premiums annually. Since about 20% of adults believe the health care system is inadequately prepared to deal with the elderly, you especially want to ensure your health insurance is up-to-date after your divorce so you are properly cared for as you age.
Close Your Joint Accounts
Married couples often open joint accounts for saving money or for household expenses. It does not make sense to have the account open after your divorce, as there is no money being channeled there. Joint accounts left dormant are liabilities. It is important to cut off any financial links with your partner when getting a divorce; you may find yourself paying credit card bills and overdrafts on your joint account. If you have any balance on the joint account, you should request the bank to cancel any credit cards related to the account and suspend the account.
Place Assets In Your Name
For clarity, you should ensure that you rename all your assets. This will help you avoid any inconveniences when you want to sell the property or engage in any kind of transaction. Alternatively, you can create a new trust and place the property under it.
Create a New Budget
In addition, creating a new budget will place you in a better position to get a hold of your finances after a divorce. This is a great way to save money, especially if you cannot afford a fully-fledged financial plan. A budget will help you track the money you earn versus your expenditure. It also guides you for healthy spending and saving habits.
Getting your finances on track before, during, and after a divorce will help you avoid many challenges and save you money. It also sets clear boundaries on ownership of property. With these tips, you can secure your finances for the future.
