5 Financial Steps for Women Getting Ready to Divorce

Divorce can be one of the most excruciating experiences we have. When we decide to divorce, we immediately face a future very different from the one we had planned, leaving many of us stressed about how we move forward. Add in money concerns, and the transition can become traumatizing.

This is why I counsel divorcing women to take charge of their finances. You have to know where you are and where you want to go to understand what you want from your divorce. If you are preparing for a divorce, here are five steps to help put you in charge of your financial direction:

  1. Get organized. Gather the financial records and documents of your marriage—for example, mortgage papers, insurance policies, retirement accounts, and tax returns. Try to go back at least three years in documentation, though five would be better. Your attorney will need all this information. Put your paperwork and e-documents in a secure place where your soon-to-be ex-spouse can’t access it.
  2. Take an inventory. This is more data your attorney will need to negotiate your marital settlement. Make a list of all your property, both jointly owned and separately owned. Although states’ definitions vary, examples of joint ownership would include the house you purchased after you married. Examples of property that is separately yours would include anything you owned before the marriage, plus gifts and inheritances that were given to you alone.
  3. Make a budget. You will need to make hard decisions about whether you keep your home, for example, and to do that, you need to understand what you can afford. Tally up your income, and determine your expenses. This process should be detailed—consider combing through several months of bank account and credit card statements to get a firm grasp of your finances. Hopefully, when you subtract expenses from income, you will be in the black. But even if you are in the red, take heart: You have a much clearer understanding of where you are, and that is important. Now you can start making the decisions about what expenses to cut and what to keep.
  4. Set up your own accounts. State divorce laws may have restrictions about how much you can withdraw from joint accounts, so check with your financial planner or attorney before you act. But if you are given the green light, then open new accounts for checking, savings, and credit cards. This step is not only money smart; it can feel empowering to take such concrete action. Concurrently, close or freeze joint accounts if you are legally able to. If you must maintain joint accounts, then consider setting up alerts so you will be notified if your spouse makes a large withdrawal.
  5. Change your beneficiaries. Comb through your insurance policies, retirement accounts, non-retirement accounts, will, living will, advance directive—anything where you might have named your spouse as a beneficiary or left them an inheritance. Again, state laws will dictate whether you can completely remove them before your divorce is final, but it is crucial that your documents reflect your wishes as much as possible should anything happen to you.

Divorce is often a drawn-out process, and these steps are just the starting point. However, they are important because they will help you gain a better understanding of where you are financially, help you feel independent, and help increase your confidence that you can successfully make this transition into your new life.