Oftentimes in marriage, couples will combine finances and pay bills together. Some will share financial accounts and other assets as well. While none of these things are bad ideas, separating these accounts and starting over can be tricky if a couple gets divorced.
If you’re going through a divorce or are newly divorced, you may be trying to figure out your finances independently for the first time in a long time. More than 70% of married couples combine their finances including sharing a bank account and credit cards. On the contrary, roughly 28% of millennial couples keep their finances separate. Did you know that if you’re going through a divorce and both spouses have separate bank accounts, those funds aren’t completely protected?
Both Kansas and Missouri are equitable distribution states—Missouri is also a dual-property state—so marital assets are divided in a way that the couple or a judge sees as fair, not necessarily an equal split. Finances are considered marital assets, so whatever income was made during the marriage will be distributed to both spouses.
If you’re like most divorcees and feel overwhelmed about your finances following a divorce, you are not alone. The experts at The Law Office of Young, Kuhl & Frick, LLC, are sharing tips on how to regain financial independence after divorce. Continue reading to learn more.
First, Consult Your Divorce Attorney
It may seem like common knowledge, but it’s best to consult your divorce attorney before you take any drastic measures with your finances. They’ll be able to tell you about any stipulations that regard your marital property (which includes finances) and you’ll want to make sure you adhere to them. The last thing you want to do is go against your agreement after your divorce is final.
Understand Your Finances
You can’t realistically regain financial independence until you understand your finances. Whatever you understood about your finances when you were married will be completely different from your current financial situation. Understand your finances by taking a closer look at your tax returns, bank accounts, retirement plans, life insurance policies, etc. Once you have a better understanding of what you’re working with you’ll be able to plan your financial future.
Establish a Monthly Budget
Even if you receive some form of maintenance or alimony, you’ll want to establish a monthly budget for your new lifestyle. If you and your former spouse used to split the cost of food, entertainment, bills, and so on, it must be quite a shock to be fully responsible for your expenses. One of the most proactive things you can do post-divorce is to establish a monthly budget to ensure you don’t overspend.
When you’re establishing your monthly budget, be sure to list all types of income such as salary, maintenance or alimony, child support, and any other sources of income. Likewise, list all expenses including your mortgage or rent, monthly car payments, utilities, and anything else that you spend money on throughout a given month. The beauty of creating a budget is that you can adjust it monthly, so you don’t have to be 100% accurate in the beginning. Establishing a monthly budget will help you be financially independent post-divorce and help you stay on track with your finances.
Work on Your Credit Score
While getting a divorce doesn’t necessarily equal a bad credit score, separating your assets can lower your score. How does separating assets affect your credit score? Simply put, original loan and credit card agreements still stand post-divorce. All debt that was accrued during your marriage will still need to be paid off following your divorce. So, if your former spouse is responsible for making payments to creditors and they fail to make them on time, your credit score will be directly affected.
You can work on increasing your credit score by opening a new credit card in your name and your name only, paying your bills on time (and making sure your former spouse pays joint bills on time), and closing joint accounts with your former spouse.
Regaining financial independence post-divorce can be a challenge but it can be done. By following the tips above you’ll be sure to get back on track rather quickly. If you have any questions about regaining financial independence following your divorce, contact the team at The Law Office of Young, Kuhl & Frick, LLC.
Likewise, if you’re currently going through the divorce process and are looking for a family law attorney in Lee’s Summit or a divorce attorney in Kansas City, The Law Office of Young, Kuhl & Frick, LLC would be happy to help. With over fifty-three years of combined legal experience, our family law firm is comprised of a team that’s skilled in both negotiation and litigation, handling family law matters from the most complex to the most straightforward.
We have offices in Lee’s Summit, Missouri, and Leawood, Kansas (by appointment only). In addition to our two physical locations, our firm’s family and divorce attorneys have practiced in Jackson, Clay, Cass, Lafayette, and Platte County, Missouri as well as Johnson County, Kansas.