Unfortunately, in my line of work, I end up talking about divorce a lot. Divorce is emotionally traumatizing, but just as debilitating is what can happen to your financial life. Like debt, the financial ramifications of divorce often leave you paying for your past in your present. Know what makes moving on even harder? Paying for an ex-spouse’s debt. I write a bi-monthly column for SmartyCents.com and I recently covered this topic in-depth over there. Hopefully, you never have to use these tips, but being prepared going into a divorce is absolutely necessary. Success in a hard time takes extra support, so even if you aren’t going through a divorce yourself, you can always help encourage a friend to make smart decisions in their time of need.
Your first step toward a successful relationship transition (you can thank The Pete the Planner Radio Show attorney for that wonderful euphemism), is to protect your money. And where do most people access their financial information? Online with a simple password. The wrong person knowing just the right few letters and numbers can decimate your financial life. Don’t let this be your story. Immediately change all your passwords and revoke access to accounts where necessary.
“If you have joint accounts, just know that at any time the other person could clean the account out. Call your bank to understand the rules and regulations of your particular account. Also be aware of automatic payments coming through the account—you definitely don’t want to pay for your ex-spouses services, etc. It’s also important to remember where you have credit card information saved. Websites like PayPal and Amazon.com store your payment information, and if your ex-spouse has access to those accounts, he or she could potentially spend your money.” (courtesy of SmartyCents.com)
In most relationships, one spouse is dominate when it comes to the finances. While this works well in a relationship, it can leave one spouse in the lurch during a divorce. If you are the out-of-the-loop spouse, you’ve got to dive right in. “This may very likely mean hiring someone to help you manage your investments. You need to find and understand what is in your retirement accounts, college funds and real estate holdings. And don’t forget about insurance policies. It’s likely you will no longer want your ex to receive life insurance benefits, so this will require some paperwork to change. As for other insurance types, health, auto and home, these will all also require some paperwork to have you listed as a policyholder if you aren’t already.” (courtesy of SmartyCents.com)
And as I’ve talked about before, budgeting, especially when it comes to housing expenses, will absolutely be the key to your financial success post divorce. Divorce is a very serious financial topic. One which requires extensive research and education to deal with properly. Check out my other tips for this transition over on SmartyCents.com.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.