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<March 2015>



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10 Smart Financial Tips For Divorce


If you’re heading for a divorce, you’re not alone. Approximately 41 percent of American marriages end by divorce.1 Yet they don’t always end equitably, especially in terms of finances.

There are steps you can take to minimize the financial damage of divorce and to prepare for a financially stable future. If you are separated from your spouse, considering divorce, or already divorced, here are some financial tips for surviving—and thriving.

Tip 1: Hire a financial advisor. You probably have hired a lawyer to walk you through the legal intricacies of divorce. It makes sense to rely on a licensed financial advisor to do the same for your finances. A financial advisor can help you develop a budget, and plan for future spending and retirement, given your newly single status. They also can help provide the comprehensive financial analysis that your lawyer can use to justify the settlement of financial affairs. However, not all financial advisors are equally effective. Follow these guidelines on how to choose a financial advisor.

Tip 2: Find and organize important records.
You will need access to many records as you update your marital status, name, address, and other changes. Records may include wills, social security cards, powers of attorney, company benefit and retirement statements, life insurance, car titles or payment books, mortgage statements, loan documents, and bank account statements. Check your most recent tax return to ensure that you have a list of all of your assets, and the records that accompany each.

Tip 3: Close joint accounts.
These include checking and savings accounts, credit cards, safe deposit boxes, investments, property, etc. Check your credit report to make sure that you haven’t missed an account. Now is the time to open your own independent account.

Tip 4: Update beneficiaries, names and addresses. If you’re like many people, you probably named your spouse as a beneficiary for your life insurance, your retirement account, your employee benefits package, and so on. You surely listed your spouse as a beneficiary in your will. Review your important documents and notify organizations of your change in marital status. You can do so in writing with a form letter and copy of the divorce agreement, once finalized.

Tip 5: Monitor your credit. Divorce can sometimes affect your credit score, especially if you switch from your married name to a maiden name where you haven’t been issued credit before. Also check that debts unpaid by your former spouse haven’t negatively affected your score.

Tip 6: Develop a budget. Now that you are a single income household, take stock of your income and expenses. We often tell our customers to review their checkbook and credit card statements to determine how much they actually spend in a month. Then, use that as a guideline for your budget. Since divorce almost always results in reduced income, take steps to pare down expenses. Choose from one of these budget templates to create your new household budget.

Tip 7: Set up a system to pay your bills. In addition to coming up with an organized system at your desk at home, there are software programs that can help you stay on track, such as adding a bill’s due date to your calendar as a reminder. At Lakeland Bank, we offer online banking with bill pay and email notifications that can help keep you organized. Always pay mortgages, utilities and health and property insurance first. If cash is low, contact your creditors and explain your situation.

Tip 8: Use cash for nonessential spending. Keep nonessential spending to a minimum. But if you do decide to buy something that is a discretionary expense, pay with cash or use your debit card. That way, you’re more likely to think about the purchase and less likely to spend your hard-earned money.

Tip 9: Plan for emergencies.
It is beneficial to have an emergency fund that covers six months of expenses. Emergencies happen, and it is important for you to plan for them. Creating a cash cushion is a wise idea, especially considering you’ll be on your own financially. If your settlement doesn’t include enough money to be placed in an emergency account, then your financial advisor can help you put together a plan to create such a fund.

Tip 10: Plan for retirement. Reassess your long-term goals for retirement. Your financial advisor can help you to rework your retirement, your plans for funding college or any other major expense.

Finally, stay open to information from trusted sources. The Financial Planning Association offers tools, resources and articles on dealing with a divorce and you can stop in your community bank to get information from a trusted financial advisor.

*Securities are offered through Essex National Securities, LLC, member FINRA & SIPC. Insurance products are offered through Essex National Insurance Agency, Inc. Neither are affiliated with Lakeland Bank. Products are not guaranteed by the bank, not FDIC insured, not a deposit, not insured by any federal government agency, and may lose value including loss of principal.

1 Tips for a Smarter Divorce, http://www.forbes.com/2007/03/06/divorce-tips-money-pf-estates-in_mb_0306money_inl.html

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