Tips on Avoiding Financial Mistakes During a Divorce

 Posted on June 03, 2014 in Divorce

Although going through a divorce can be a very emotional time, it’s important to keep divorce finances in mind in order to protect both your future and your children’s future. Financial analyst Suzanna de Baca offers these financial tips for people who are going through a divorce:

Do not give too much away in the divorce settlement.

Negotiating with your spouse over property and assets can turn acrimonious. The constant arguing and conflicts can be emotionally draining, causing many people to "surrender" and end up walking away with less than an equitable amount – just to stop the fighting. It’s important to protect your financial future, so de Baca suggest working with both your attorney and a financial planner to ensure you receive a settlement that is in your best interest.

Do not assume all debts are paid.

Once the divorce is final, it’s important to check to make sure your name is no longer associated with any debt that your ex-spouse is now responsible for. For example, if your ex got the house, your name should be taken off both the deed and the mortgage. Otherwise, you could be held financially liable if they fail to make mortgage payments. You should also make sure all joint credit card accounts are closed.

Accept that your financial situation has changed.

You are now living as a single income person and will need to change your budget, and possibly your lifestyle. Be careful not to rely on credit cards to purchase the things you can no longer afford. This can create a financial disaster could be very difficult to get out of.  You also need to be careful not to overspend on your children. Often, divorced parents compete with each other over who is going to buy the children the best toys, the best clothes, etc. Not only is this not financially healthy, it may also be emotionally unhealthy for the children.