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Financial Planning for Divorce: Tips for Every Stage of Your Relationship

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Divorce is one of the most awful things you can go through. (How’s that for an uplifting lead into a blog post?)

The process is overwhelming and there is so much to accomplish it. But a plan can help you have a better outcome in your divorce. 

As a forensic accountant specializing in helping women going through divorce, I have seen many cases of poor planning or lack of planning altogether when it comes to finances.

A plan for your financial future can help you, no matter the stage of the relationship you are in.

If you are engaged, your focus is on planning your wedding, of course. During this process, it’s easy to get wrapped up in the event-planning, catering, logistics, etc., but I want to encourage you to remember your financial future and consider a prenuptial agreement as part of the planning process. 

I know, prenups get a bad rap, but just hear me out.

You don’t want to think about divorce while planning a wedding and I certainly don’t want to see you in that situation. But discussing finances at the beginning of a marriage can be so positive.  For example, getting on the same page about your spending plan (also known as a budget!) can help avoid painful disagreements later. Agree now on the acceptable spending limits, your long-term savings goals, and when is important to both of you regarding the money. The prenup also protects your assets, both now and in the future. It protects both spouses, no matter how much or how little you have right now.

If you are currently married, but are considering divorce, start by making a list of shared accounts and credit cards, gathering documents, and writing down important dates. One of the most important things to do for the financial part of your divorce is to gather all of this information. If you begin now, you’ll have a head start that may ease your burden later in the process.

Even if you are right in the middle of your divorce and approaching the light at the end of the tunnel, there’s still time to plan. A solid financial plan for your post-divorce life is so important. You need to know exactly what your expenses are going to be so you can figure out where you will stand financially.  It can be scary to think about paying for all your expenses on your own. A plan for your new budget is a great place to start. Know your numbers. 

Once your divorce is final, you can still benefit from planning. What does your income look like? How much do you need to set aside for retirement? What are your fixed monthly  costs like rent, mortgage and car payments?  Don’t forget to start an emergency fund, even if you can only set aside a small amount of money each month. Even $50 per month may come in handy when you have an unexpected auto repair or medical copay. A safety net of an size can be a great help.

Divorce is scary, especially when it comes to the finances. It is hard to do it all on your own, but if you take some time to plan, you will be better prepared for whatever comes. 

Tracy Coenen, CPA, CFF

Tracy Coenen, CPA, CFF

Forensic Accountant and Fraud Investigator

I work with divorcing parties who have concerns about the money. While I can work with either party, it is most often the woman who is in need of my services. I focus on “lifestyle analysis,” which is a detailed tracing of funds through bank accounts, credit card accounts, and investment accounts to determine where the money went and how much the family’s lifestyle costs. My results are used to track down hidden money or make calculations related to spousal and child support.

I truly believe that knowledge is power. I am here to help inform the parties about their money. Where did the money go? How do we make sure there is a fair division of the assets and the income?