Divorce can trigger poverty if you are not careful. At the onset of a split, take a proactive approach to protect your assets and optimize the value of your money.
The effort you put into preserving your finances can help you mitigate many of the financial repercussions of a divorce. Here are some common mistakes to avoid during this sensitive time.
Frivolous spending sprees
Knowing you will split from your spouse might make you want to irrationally stockpile. You might see nothing wrong with spending a bunch of money from joint accounts prior to their closure. However, this move could make you look bad in a court of law and might also jeopardize your settlement.
While you await the start of your divorce, prepare a budget and brainstorm ways to make money. Open a personal bank account and start taking measures to move toward financial independence.
Waiting for money to find you
If you were the partner who stayed home or took care of the children, for example, you may still have the mindset of waiting for the money to come to you. However, now is the prime time to start looking for creative ways to make your own money. Draw upon community resources to improve your resume and begin looking for jobs. Adopt a conservative approach to spending and save money wherever you can.
Using your retirement funds
Depending on the circumstances of your split, you may have early access to some retirement funds. Refrain from spending this money. It could have lasting repercussions that you might never recover from. Rather, learn about your options for creating your own retirement account and swiftly move that money into it. Additionally, CNBC recommends removing your ex as a beneficiary from any existing estate plans.
Divorce will impact your finances regardless. However, your preparation and care during this time could save you a lot of money and heartache.