advertisement
You survived the divorce. Now comes the hard part: getting your new single life on track, especially when it comes to money.
In many cases, the ex-wife has a larger amount of post-divorce financial work to do.
True, some women make more money than their husbands, but they are generally exceptions. And true, the ex-husband usually contributes to two households, his new single one as well as the one maintained by his ex-wife, who typically is the custodial parent of their children.
But the harsh reality of divorce is that the lower wage earner usually suffers more financially. And that lower wage earner usually is the woman, who may have left the work force, at least temporarily, to care for children.
Even then, however, it's possible to get your post-divorce finances in order and ultimately prosper. The following tips and strategies should help. And much of the advice applies regardless of gender.
Get involved
It's the 21st century, but family finances aren't equal for many reasons.Carol Arnott, a divorce financial analyst with Greenville Financial Group in Greenville, Del., cites a recent survey of married couples that found the men more likely to be in charge of investments, insurance and retirement planning. The women, meanwhile, focused on day-to-day budgeting and bill-paying.
- Talk back: How has divorce affected your finances?
In short, men were more strategic when it came to money and more comfortable making decisions regarding their financial futures. So it's no surprise that most of Arnott's clients are women. And she's not shy about encouraging them to get involved with their finances and seek professional help "prior to filing or as soon as they're served with papers."
More from MSN Money and divorce360.com
"Start with gathering the information," Arnott says. "For many women, it's the first time they are looking at many of these statements."
Carve out your own credit
Several of those statements are going to be for credit cards or other revolving accounts."One of the things that everyone needs to do is check their credit report," says Sheryl Garrett, a certified financial planner and founder of the Garrett Planning Network in Kansas. "Most times, couples, especially longtime couples, have had credit in joint names. If you don't have separate credit, you need to establish separate credit. This can affect men just as easily as women."
Under federal law, every credit customer is entitled to receive one free credit report every 12 months from each of the national consumer-credit reporting companies -- Equifax, Experian and TransUnion. (See "How to get a credit report for free.")
During your divorce, accounts should have been separated and decisions made about which party is responsible for what debts. The credit reports will show whether your name erroneously remains on any accounts, Arnott says. If you spot such an error, it's imperative to get your name off any debt for which you're no longer responsible.
According to the Federal Trade Commission (.pdf file), federal law does not allow a creditor to close a joint account because of a change in marital status, but the creditor can do so at the request of either spouse. Once the credit accounts are separated, you might find you have little or no credit history in your own name. So you need to rectify that as soon as possible. But be aware it's not necessarily a simple process.
Video on MSN Money
The 2 types of divorceEven a prenuptial agreement doesn't guarantee a separation will go smoothly.
Also from the FTC: A creditor does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit.
When you do get an individual credit account, the key for a newly divorced person dealing with new financial challenges is to use that credit wisely.
"It's difficult. We all carry debt," Arnott says. "But credit cards aren't the solution to financial-planning needs. The can get you over a short-term hurdle, but if you're not careful you will dig yourself into a deeper hole."
To avoid making that mistake, you have to take the next financial step: creating a budget.
Establish a realistic budget
Ah, yes, the B-word. It's terrifying even in the best of circumstances. But post-divorce, it's critical to overcome fear of it."Although you're familiar with budgeting, post-divorce, things change," says Arnott, even when the two parties have negotiated an equitable settlement. And for some, she says: "It's hard to acknowledge that your lifestyle will change. You had one household to support, but now there are two. I've had women who feel entitled to maintain the same level -- pedicures, manicures, wardrobe, hair -- they enjoyed when married."
In the cases in which expectations are more reasonable, the problem is the process itself. "It's the first time they have done some budget planning," Arnott says. "They know the general bills will come and have been paying them, but that's hindsight. You need to look ahead, or you're going to crash."
Continued: Budget considerations
Rate this Article
High
