With one in three marriages ending in divorce during their first 10 years1, you're not alone in facing this life changing event.
For most people, divorce produces a lot of money-related questions: "How can I find housing for my children and me?" "How can I achieve financial independence?" "How do I create a plan to pay off my debts?" "How can I protect my children's financial future?"
This article can help you answer your questions and take steps toward achieving your future financial goals.
Find the right housing
If you are not staying in your current home, your first priority might be to find housing for yourself. If you have children, finding a place to live will probably be especially important.
With today's homebuyer programs, buying a home of your own might be easier than you think. You may want to look into home mortgage programs that help you buy a home with little or no out-of-pocket money.
You should also consider getting pre-approved, especially if you're looking for a house in a particular school district. Pre-approval offers many benefits:
- Save time. Once you're pre-approved, you won't waste time looking at homes beyond your budget.
- Improve negotiation. Sellers may show preference to a buyer with approved financing. Once sellers know you're pre-approved, they may be more willing to negotiate price or other terms of your offer.
- Remove anxiety. By knowing how much financing you can obtain, you'll remove one major worry from the home-buying process.
Learn more about buying a home.
If you'll be renting, don't overlook renter's insurance2, which offers coverage for your belongings in the event of fire or theft. This type of coverage is normally not included in rental contracts.
Achieve financial independence
After a divorce, achieving financial independence should be a top priority.
If your financial accounts were in both your names, the first step toward financial independence is to establish new accounts for yourself. Going forward, this will make record keeping far easier, and it will help avoid any future confusion.
Next, you'll need a way to pay bills and deposit paychecks. That's why it makes sense to first open a checking account3. Besides, you'll typically need a checking account in order to obtain a credit card or take out a loan.
It's also a good idea to build a financial cushion to protect you from unforeseen expenses. Choose a savings or money market account3 with a competitive rate of interest to help your savings grow.
Consider other ways to make managing money easier. One common account feature, overdraft protection, is another easy way to protect you from the unexpected.
Whenever you experience a major lifestyle change, such as with a divorce, it's a good idea to review or create a budget. After a divorce you may have new expenses, such as rent or mortgage payments, legal expenses, alimony payments or child support. Your income also may be different.
A budget can help you adjust to your new lifestyle and build financial independence. The U.S. Bank online budget calculator makes it easy to create and fine-tune your budget.
Good money management is fundamental to achieving financial goals. It includes keeping accurate records, paying bills on time, and knowing your account balances at all times.
Thanks to the Internet, managing your money has never been easier. With Internet banking, you can check balances, transfer funds and download account balances to your financial software whenever it's convenient for you. Learn more about U.S. Bank Internet Banking.
Online bill payment is just as easy. For example, you might want to set up automatic payments to make alimony or child support payments. Or use it to make sure your regular bills, like rent, mortgage or car payments are paid on time. Learn more about U.S. Bank Internet Bill Pay.
Create a plan to pay off debt
To help you get back on track financially, you'll want to put old debts behind you. You may have court costs and lawyers' fees, and you and your former spouse now will be supporting two households instead of one.
If you have multiple loans or credit cards, debt consolidation can help make your payments more manageable. You may even want to look into debt consolidation simply to lower your monthly debt maintenance costs.
If you need extra funds to meet new financial needs, such as a car, educational expenses or legal fees, there are tailor-made credit solutions that may help you.
Use our online calculators to find out how long it might take to pay off a loan or how long it might take to pay off credit card debt.
It's also important to protect your good name during and after a divorce. Make sure your name is not associated with loans, mortgages or credit accounts that are no longer your responsibility. You can monitor your credit history by obtaining a copy of your credit rating at any major credit bureau:
To begin building credit history in your name, open a credit card account. Find the right credit card for you.
You may also want to open a line of credit in your name.
Get more credit tips.
Protect your children's financial future
Insurance is especially important if you have children. After all, you want what's best for your children. Life insurance can help protect their futures if you're not there.
If you're now the sole supporter of a child, you'll want to increase your life insurance
2. On the other hand, if you're now single and have no children, you may want to review your life insurance needs and change beneficiaries on current policies.
You can learn more about insurance solutions or request an insurance quote on our Web site.
Lastly, it's a good idea to review or draw up your will now, because this task is easy to put off and forget about as time passes. Contact a trusted legal adviser to help you.
The importance of professional advice
Personal finances can get very complicated during a divorce. Emotions further complicate decision-making. That's why, along with professional legal advice, it's a good idea to get professional financial advice4 on more involved financial decisions.
The professionals at U.S. Bank can help you with a wide range of complicated financial issues. Contact a U.S. Bank Professional today:
Banking or debt consolidation
Investments and retirement planning4
Related Achieve Your Goals topics:
Learn about buying your first or next home.
Learn about financing an education.
Learn about setting and reaching retirement goals.
Use our Online calculators to help you plan.