Leah Hadley [00:00:01]:
Welcome to Intentional Divorce Insights. I'm Leah Hadley, certified divorce financial analyst, accredited financial counselor, and the founder of Intentional Divorce Solutions. I'll be your guide through the complexities of divorce, finance, and emotional wellness. Join me as we uncover practical tips and empowering insights to help you navigate your divorce with clarity and intention.
Leah Hadley [00:00:25]:
Hello, and welcome back to another episode of Intentional Divorce Insights. I'm Leah Hadley, and I am thrilled to have you with me today. If you're thinking about or in the process of going through a divorce, one of the most crucial aspects to consider is how to safeguard your financial future. Divorce is an emotional roller coaster, but it's also a significant financial transition. And if you're not prepared, it can have lasting financial consequences. So today's show is all about financial preparedness. We're covering essential steps to protect yourself and secure your financial future during and after a divorce. Now I know this can be a stressful time, but with the right information and a well thought out plan, you can move forward with confidence.
Leah Hadley [00:01:18]:
The first step in preparing for a divorce is understanding your current financial situation. Now it's not gonna be the most exciting thing for many of you, but it is essential. So here's how you can get started. And gather all of your financial documents, you know, through depending on the kind of divorce process you you decide to utilize, you may just need the most recent statements. You may need a year of statements. You may need 3 years of statements. But for the purpose of assessing your current financial situation, it's fine to just gather the most recent, investment statement, tax returns, bank account statements, loans, rental agreements, credit card statements, basically anything with the dollar sign on it. And it may feel a little overwhelming at first.
Leah Hadley [00:02:07]:
But if you just collect all of this information, so that way you can really get clear on what your current assets, things you own, and liabilities, what you owe, are, that's gonna be tremendously helpful. Now for some people, as long as they're going through the process of collecting the current statement, it may also be helpful just to prepare for the divorce process to consider collecting 1 years of state 1 year of statements or 3 years of statements. Typically, you know, when people file for a divorce and are going the litigation route, more information is needed. Whereas when, you know, people are mediating their divorce or, going some other alternative dispute resolution, way, they may not need as many statements. But gathering all your financial information is going to be step number 1. Step number 2, get clear on what your income is and your spouse's income. So what are your sources of income? What is the timing of that income like? If you expect child or spousal support to be part of your future, it's really important to have a sense of what income is. And keep in mind that divorce may affect your income in ways you might not anticipate.
Leah Hadley [00:03:24]:
So planning now will help make those things much easier later. You have a sense of what your income is, when you're getting your income, where it's going, and all of that. I want you to get clear on your expenses. So it's important to understand your spending habits now. Divorce does often lead to a lifestyle change, and it's important to know where your money is going. So there's some ways that people can do this. You can just use an app, especially if you spend, you know, via your debit card or credit card. You're not using a lot of cash.
Leah Hadley [00:03:59]:
A simple spreadsheet can can help. Sometimes people literally just take a little notebook and and write down. But you wanna track everything. You wanna track housing expenses, utilities, groceries, entertainment, clothing, personal care, food, all of it. Once you have a solid understanding of your monthly budget, you can begin to figure out what your financial needs will look like post divorce. So you wanna start with what the current expense situation is and then kinda look at what what might be changing and how that might be different post divorce. So once you have a clear understanding of your finances, it's time to think about how to protect your assets. And one of the critical steps I encourage people to take is to really look at protecting their credit.
Leah Hadley [00:04:50]:
Your credit is your lifeline to future financial security. So you wanna get a copy of your credit report and monitor it regularly for any unusual activity. If you're worried that your spouse might take on debt in your name, consider freezing your credit or getting alerts for any new activity. As far as, you know, retirement and investment assets go, most of you are gonna really wanna plan carefully in terms of how they get divided through the divorce process. It's important to know if you brought assets into the marriage, you may have assets that are not gonna be divided as part of the the division of marital assets. Same thing with debt, though. If you brought debt into the marriage, it can be the same thing. The laws are gonna vary by state, but you wanna protect your retirement and investment accounts.
Leah Hadley [00:05:45]:
One of the things you can do is collect the information about what you had prior to your marriage. So that way, you can start to look at if you have a claim that maybe some of your funds are, are not marital or not subject to division. Another thing you wanna make sure you do is have your own individual checking and savings accounts, especially if most of your accounts are shared. That's gonna give you some control over your own funds and help you with a fresh start. You do wanna eventually, not necessarily immediately, but make sure that you're updating direct deposits and automatic bill pays and things like that for your new accounts. Another piece to preparing financially for a divorce is to build a financial support team. So a certified divorce financial analyst, which is one of the credentials that I hold, is really, really helpful, in helping you understand all of the financial options, providing solid financial support during this difficult time to really navigate some of those complexities. So a CDFA, that's certified divorce financial analyst for short, specializes in the financial aspects of divorce.
Leah Hadley [00:07:09]:
They can help you make informed decisions about asset division, tax implications, your financial future. Their expertise can really be invaluable, especially if your financial situation is complicated. You may also find that you wanna have an accountant on your team. We find that this can be helpful, especially if there's family businesses and things involved, rental properties and whatnot. If your CDFA is a financial adviser, financial planner, they can provide support to you not just during your divorce, but longer term. But some CDFAs really just focus on the divorce itself, and you may need to engage a financial adviser or financial planner as well. So that's really important for looking forward and making sure that you are getting clear on your financial goals and really setting yourself up for future financial success. And, of course, part of having a good support team is having good legal support.
Leah Hadley [00:08:09]:
Now your divorce attorney is there to make sure that you're protecting your legal rights, but they're also gonna have some knowledge of the financial side of things too. And you wanna make sure they understand your financial goals and can really work collaboratively with your whole financial team in order to get you to where you need to be. Now divorce isn't just about getting through the process. It's also really about preparing for your future. So let's talk about how to build a financial plan for life after divorce. So post divorce, your financial landscape is going to look different, and that's crucial to create a new budget based on your new income. Now I know for some people, budgeting is a bad word, and it's not something that you feel comfortable doing or enjoy doing. But especially when everything is changing, when your income is changing, your expenses are changing, it's gonna be really helpful to sit down and really take a look at what that looks like.
Leah Hadley [00:09:09]:
Doesn't mean you have to live on a budget forever. But in that transitional period, as you're starting your post divorce life, it'd be really helpful to factor in what your income is going to look like now with their support payments, how has housing changed, what other kind of lifestyle adjustments. It's really important that you come up with a budget that is sustainable, that's gonna allow you to live within your means for the future. Right? It's important to understand tax implications of the decisions that you're making. So, you know, depending on how you may have filed previously, if you have children, if you don't have children, there are a lot of changes that are happening in terms of your taxes. And it's a good idea to sit down with your tax professional to understand how those changes are gonna overall impact your tax situation. That way, you're not gonna get caught off guard when, taxes rolls on rolls around. So for example, some people leave their withholdings the same as if they were married when they're going to be filing single going forward.
Leah Hadley [00:10:17]:
Sometimes people are still claiming children on their withholdings, but maybe their children have grown up and and, are no longer being claimed on the tax returns. Right? So making sure that your withholdings are correct is really important, and that's something that you wanna update as part of your post divorce plan. Right? Another important consideration is updating your insurance. That can include health insurance. It can include life, disability insurance, making sure your beneficiaries are up to date and that they reflect your new circumstances. You wanna ensure that you and your dependents are fully protected. And so that's really making sure that insurance is in place. And I really like for people to think about insurance more as an investment than an expense.
Leah Hadley [00:11:07]:
So a lot of times, I I've worked with people over the years who will tell me that they can't afford health insurance. But sometimes I have to push back and say that they can't afford not to have health insurance, and really talk about what the risk is, the financial risk, if they don't. And so really looking at all that insurance coverage and making sure that you're protecting the things you need to protect is important. Finally, I wanna remind you to stay calm and resilient during the process. Divorce can be emotionally draining, but don't let those emotions dictate your financial decisions. Focus on the long term, and remember, you don't have to figure it all out in a day. Just take it step by step. Don't be afraid to ask for help when you need it, whether that's from your financial professional or you're leaning on a therapist.
Leah Hadley [00:11:57]:
Building emotional resilience is just as important as securing your financial future. Take care of yourself, surround yourself with supportive people, and trust that you are taking the right steps toward a more stable future. So I know I went through a lot today, and it's a lot of specific information that I went over. But to recap, we talked about how to start with assessing your financial situation. We talked about protecting your assets. We talked about building a financial support team and planning for your post divorce future. By taking these steps, you're setting yourself up for financial security and peace of mind during a challenging time. Remember, you don't have to do this alone.
Leah Hadley [00:12:41]:
There are professionals who can help you through every step of this process. And if you need additional support, feel free to reach out and don't hesitate to take action to protect your financial well-being. I'm so glad you joined us today on Intentional Divorce Insights. If you found this episode helpful, I'd love for you to share it with others who might benefit from this information. Stay tuned, and we'll see you next week.
Leah Hadley [00:13:05]:
Thank you for joining me on Intentional Divorce Insights. It's a privilege to share this time with you. I hope each episode offers valuable guidance to navigate your journey. If you find our content helpful, please leave a review to help others discover the benefits of intentional decision making in divorce. Until next time, take care and continue to embrace your path with intention.
