Going through a divorce not only takes an emotional toll, but can also leave a strain on your finances. Between legal fees and income changes – there’s a lot to adapt to, plan for, and consider. After updating your insurance and legal documents, there are financial steps to take after a divorce to maintain your independence and security. Here’s what we recommend, if this is something you are going through and are trying to best prepare to embark on your next journey in life.
Close your joint accounts
You may have already done this, but if not – be sure to immediately close all your joint accounts. Leaving unused accounts open can lead to fees. And even worse, sharing an account with an ex-spouse leaves the opportunity open for racking up a bill and potentially leaving you responsible for it. Leaving your joint account open is not worth the risk of potentially hurting your credit score and financial health.
Open new accounts
After a divorce, it’s time to start fresh. That means opening a new credit card, checking, and savings account in your name exclusively. With new accounts, comes more opportunities to make better financial habits. We recommend taking this time to consolidate any potential credit card debt, and making the commitment to pay your balance on time and in full each month.
At First Financial, we offer credit cards and checking accounts that fit a wide range of financial needs. Whether you’re looking for a card with extra perks, low rates, or one to help build or re-establish your credit, we can help!
Adjust your budget
Mastering budgeting is an empowering journey. As you change from two incomes to one, you’ll want to get a full idea of your expenses and cash flow – especially if you have children. Start by creating a list of essential expenses including housing costs, food, transportation, clothing, internet, cell phone, insurance, and more. Use our fillable PDF budgeting worksheet as a resource. Then add up your monthly income and deduct your expenses. The amount left over should be used toward building your savings and/or for any less essential purchases or entertainment.
Rebuild your savings
Speaking of savings, now is the perfect time to rebuild your emergency fund. Once you have a good idea of your budget and cash flow after covering expenses, you’ll be aware of how much to devote to a savings account. The typical rule of thumb is to dedicate 20% toward savings and future investments, but you’ll also need to be realistic based on your new financial situation.
First Financial not only offers various savings accounts to our members, but we can also advise you on additional financial considerations to make after your divorce.* You can have peace of mind knowing our team is putting your financial needs first, no matter what financial situation you might be going through. Contact us to get started, or stop into your local branch to speak with a representative today.
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*A $5 deposit in a base savings account is required for credit union membership before opening any other account/loan. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Some restrictions apply, contact the Credit Union for more information.