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The end of a marriage is a stressful and life-changing experience. Separating from your spouse can do lasting damage to your finances. The longer it takes to finalize the divorce, the more damage is done. A study of 9,000 couples by Ohio State researcher Jay Zagorsky showed that long-term divorce wipes out 77% of a family’s wealth. The decline in wealth usually begins during a separation and gets worse in the months or years leading up to the divorce. 

“Divorce causes a decrease in wealth that is larger than just splitting a couple’s assets in half. Many of these people may have separated before the divorce became official, which would help explain why wealth starts falling so early. Some people may also be working less and not trying as hard to build wealth as they have marriage troubles. Divorce is often a long and messy process, and you can see this in the four-year decline.” Jay Zagorsky, author of the study and a research scientist at Ohio State University ‘s Center for Human Resource Research.

9 Ways to Keep Your Finances Healthy During a Divorce

While some decline in wealth is inevitable when you are dividing your assets, there are plenty of things you can do to keep your finances healthy during the divorce. Follow these guidelines to ensure the best possible outcome for your divorce.

  1. Hire An Attorney
  2. Aim For an “Uncontested” Divorce
  3. Start Tracking Expenses
  4. Make A New Budget For Yourself
  5. Make A List Of Assets And Possessions
  6. Manage Joint Accounts and Shared Bills With Care
  7. Remove Your Spouse As An Authorized User
  8. Open New Accounts In Your Name As Needed
  9. Update Your Will and Other Important Documents

1. Hire an Attorney

The financial intricacies of divorce are best untangled by a professional. A divorce lawyer can help you with a plan of action for joint assets and shared accounts. They’ll also prepare you for mediation and court proceedings.

If either you or your spouse intends to ask for a settlement, alimony, or child support, a lawyer can help you anticipate what is fair and typical in your state.

You’ll benefit from the legal expertise and experience of a good attorney. It’s also essential to have an objective advisor who can help you make decisions if emotions are running high, and they usually do. 

2. Aim For an ‘Uncontested Divorce’

“Regardless of the amount of assets that a couple has it is always better to have an ‘uncontested divorce’. It will be less emotionally draining and substantially cheaper than a ‘contested divorce’. Working with your spouse to come to a fair divorce agreement is the best way to avoid costly legal bills that eat up most of the value of any jointly held assets.” – David Reischer, Esq. Attorney & CEO of

In an uncontested divorce, both spouses and their attorneys work together to make decisions about how assets will be divided. Agreements are made amicably during mediation and do not require a judge rule in favor of either party.

On the other hand, if the spouses cannot come to an agreement the divorce becomes contested. A ‘ ‘contested divorce” may involve a trial or lengthy settlement discussions with your spouse’s attorney. An ‘uncontested divorce’ will be cheaper because most issues are agreed upon and do not require paying lots of money to an attorney.

3. Start Tracking Expenses

As soon as you know the divorce is imminent, begin tracking your household expenses. This information will help you build budgets for every phase of your divorce. The data will be helpful for your attorney and, when the time comes, can help the judge decide how to divide up assets and make decisions about alimony and child support. 

“Document your expenses for 2-3 months to get a clear picture of what you need to live. Capture every expenditure including groceries, gas, haircuts, eating out, car, daycare and sitters, pets, clothes and trips to Target, etc. One of the most difficult parts of divorce is the change in standard of living. Having a realistic view of expenses will help you plan for your future on your own.” – Florida Women’s Law Group

The aim of a healthy divorce is to ensure that both spouses and their family are financially secure after their lives have been legally disentangled. Neither spouse should feel as though they are financially ruined or unable to meet basic needs or obligations after the divorce.

4. Make a New Budget For Yourself

Transitioning from a dual to single-income household is going to be an adjustment. You may need to change your spending and lifestyle. Making a budget will help you get a handle on your new financial situation.

Making the budget before your divorce is final can also help you avoid taking on extra debt or falling behind on bills while juggling new expenses like childcare and attorney fees. If you are used to following a budget, you can use your old one as a guide. Otherwise, you’ll need to start from scratch using a budget spreadsheet

5. Make A List Of Assets and Possessions

Make a thorough list of everything of value that you and your spouse shared, including financial assets and possessions. Dividing up money in a bank account is relatively straightforward, but assets and material possessions also have value and need to be considered.

Although some personal assets and possessions will be easy to separate, don’t assume you’ll be able to keep something until it’s been discussed with your spouse and your attorneys. Most assets can be divided or kept by either spouse, but some may need to be sold to cover joint debts or so that the monetary value can be divided.

6. Manage Joint Accounts and Shared Bills with Care

Once you have a plan of action for shared assets, ask your spouse to help you freeze or close shared accounts, including credit cards, joint bank accounts, and lines of credit. There are rules about how this must be done, so be sure to check the contract you signed when opening the account.

Some divorcing spouses leave one joint bank account open to pay for shared expenses, especially costs related to children. It’s best to limit this to one account and have clear provisional or permanent rules for its use.

Moving money from a joint account to an individual without discussing it with your spouse is considered poor form in a divorce. The same goes for shared credit cards. Running up balances on a shared account puts the other spouse in debt and is bad behavior no matter the circumstances. 

Until your divorce is final, you’ll likely have to maintain a few shared bills with your spouse. Some accounts may be in your name, while others are in your spouse’s name. Close or separate as many of these as you can. If possible, continue to pay for these from a joint account or keep a ledger of expenses you can sort out later. 

7. Remove Your Spouse as An Authorized User

Don’t forget to remove your spouse as an authorized user on any personal accounts they may have been added to. If it is a credit card or personal bank account, you can call, and the authorized cardholder’s account will be removed immediately.

Insurance is different. You can usually remove a spouse from car insurance before the divorce is final; health insurance will have to wait. The law requires health insurance coverage to remain until the divorce is finalized. 

8. Open New Accounts In Your Name As Needed

Opening new accounts for your money can help you organize your fresh start while you navigate the divorce. You’ll need a checking and savings account and at least one credit card. 

Some find it helpful to open accounts at different institutions than the ones you used with your spouse. This can help avoid confusion or errors, but of course, it is not absolutely necessary. 

Opening a new credit card in your name before the divorce is finalized could help you get a higher limit if your joint income is considered. However, be cautious not to take advantage of that by overspending.

9. Update Your Will and Other Important Documents

“An important but frequently overlooked financial component of divorce is updating your essential estate planning documents including both your financial and medical power of attorney and your will” – Mary Kate D’Souza, Chief Legal Officer and Founder of Gentreo

You can either prepare a new last will, change the beneficiaries on your current one, or revoke it all together while the divorce is completed.

“In addition to updating your will so that it no longer benefits your ex or soon to be ex-spouse, you should also be sure to review all your beneficiary statements to make sure that your ex-spouse is no longer named as your beneficiary.”

Regarding power of attorney, most states automatically invalidate an ex-spouse’s appointment as an agent after a divorce. However, it’s good to make sure you are protected by appointing a new trusted agent who can make financial or personal health care decisions on your behalf. 

Avoid These Missteps During Your Divorce

Emotions can be intense during a divorce, and feelings like anger and frustration can cloud judgment. It’s important to stay calm and avoid missteps or misunderstandings that can make a difficult situation worse. 

Keeping an open line of communication and running all major decisions through your attorney before acting can make a world of difference. Cutting your spouse off financially, draining joint accounts, and adding to new shared debt should be avoided. 

  • Cutting your spouse off financially
  • Draining Joint Accounts
  • Taking On New Debt Together During the Separation

Cutting your spouse off financially and refusing to support them before the divorce is final will rarely work in your favor. If you have supported your spouse throughout the marriage, you need to continue to support them until the divorce is finalized. If changes need to be made to that arrangement, ask your lawyer for guidance regarding what is reasonable. 

If you suspect your spouse will act irresponsibly with shared money, freezing the account is probably the best option. The shared account can be unfrozen if both parties agree on a transaction. The window of time between the “I want a divorce” talk and filing Complaint of divorce tends to be the time people fear that shared money will be mismanaged. 

Still, it would be best if you resisted the urge to empty the account or withdraw what you feel is your share because the judge may hold that behavior against you during the divorce proceedings, whatever your intentions.

Lastly, once you are separated, it’s not good to take on any new debt together. Avoid using a shared credit card or lines of credit unless it is indispensable and you have discussed it with your spouse.

*Disclaimer: This blog does not substitute professional legal advice from an attorney. We aren’t qualified to make final decisions about your divorce. Only you and your lawyer can do that.

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