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Know how to handle finances during a divorce

Working out your financial plan is important when you're going through a divorce. Some people don't realize what a toll the split can take on their finances. Taking the time to set up your finances now can help prevent issues from occurring in the future. Here are some points to consider:

First, know what you can afford. You must sit down and write out a budget based only on the income you have now. During your marriage, you might have had two incomes coming into the home. Trying to live off one now might mean that you have to cut back on some expenses.

Second, set aside money for a rainy day. Even if you can't save much now, work on building a savings so that you have a cushion if you have unexpected expenses. While it is a lofty goal for many, you should ultimately try to save the equivalent of six months' worth of income.

Third, watch your credit report. If you and your ex had joint debts and they are supposed to pay for specific debts, your credit might get hit if they don't pay. This could drop your credit score, which could make it difficult to get a car loan or a mortgage down the road.

Fourth, track any shared expenses. Whether they are for the divorce or your children, keep proof of them so that you can receive reimbursement for them. If you have an established method of handling these with your ex, follow that method.

You also need to pay close attention to the terms of the divorce settlement. Think about what you can afford as you are trying to determine what assets you want to keep. In many cases, it is best to let go of any that have a higher upkeep cost.

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