Before divorce, you should get financially prepared
— -- In the year after she got divorced, Amber Rodgers went shopping. She wanted to "look better and feel better." She was also "guilty buying" for her two kids, now 8 and 9, she says.
When she was married, Rodgers had never followed a budget or paid bills online or taken care of her taxes — her husband was in charge of the finances.
Once they were no longer together, Rodgers says she struggled to manage all of her expenses and blew a lot of money on feel-good spending.
"When you go from a dual income into a single income, it's traumatizing," the 35-year-old says. "I literally had my electricity turned off because I just couldn't pay my bills. I had to borrow money from friends."
While many people's first inclination when going through a divorce is to hire an attorney, too many make the mistake of not also seeking financial help, says Michael DeGroat, a financial adviser at Ameriprise Financial Services who works in particular with divorced women. Studies show that women, more so than men, lack confidence and knowledge on financial topics and so tend to be more vulnerable when a divorce leaves them with more financial responsibility, financial experts say.
But a divorce often means a drastic change in finances for both men and women, and there are several crucial steps to take — if you are thinking of divorcing, going through a divorce or are already divorced — that will put you in a better position financially.
Meet with an adviser
If you think your marriage is headed for divorce, start paying attention to any bank accounts or other accounts you hold jointly with your spouse, if you don't already, so you know what your assets are, says Linda Ostovitz, partner at family law firm Silverstein & Ostovitz in Ellicott City, Md.
"Look at the paperwork that's probably in your house," she says. "Look at your tax returns. Look at your monthly bills." Understanding what you're working with will better help you prepare for how life will change after the divorce, as well as what you need to do to put yourself in the best financial circumstances possible, she says.
Start setting aside emergency cash, too — Rodgers, who recommends having about $2,000 saved, says she stashed hers in a tampon box and used it to pay initial attorney fees.
And make it a priority to seek professional financial help. It's most ideal to meet with a financial adviser before or at least during the divorce process rather than after the divorce is finalized, DeGroat says.
"The biggest thing that I see, and a common divorce finance mistake, is waiting too long to replace that partner's responsibility," he says. "Often, finances, especially in times of emotional turmoil, become a back-seat rider. A lot of opportunities are missed and a lot of mistakes made."
Rodgers says seeking a financial adviser too late was one of "the huge mistakes I know I made. Had I done that I would have done a lot of things differently, including sticking to a budget."
She did get financial help in 2010, about a year after her divorce settlement and around the same time she started her company, D.I.V.A.S., which stands for Divorcing Independent Very Able Survivors and provides resources including legal, financial and real estate help. Rodgers was previously a real estate agent.
Now she helps others going through divorce to not make the same mistakes she did.
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