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Four common financial mistakes to avoid during a divorce

The divorce process tends to bring out the worst in people. People sometimes become irrationally fixated on spiting their spouse or clinging to assets that may not benefit them. Also, people sometimes overindulge in comforting habits or pursue reinventing themselves without considering the consequences. Whatever reasons motivate it, people going through divorce tend to make several financial mistakes along the way. By examining some of the most common financial mistakes people make, you can set yourself up for success in avoiding them.

Not separating finances soon enough

One common financial mistake couples make when going through a divorce is waiting to separate their finances. Keeping your finances entwined often leads to unnecessary arguments. It can also allow your spouse the opportunity to mismanage your money or otherwise create financial problems for you. To prevent this, open your own bank account, try to split up the money in any joint bank accounts and change the passwords and security questions for all of your personal financial accounts. Some financial assets may have to be divided in court, but it is beneficial for you to separate what you can as soon as you can.

Trying to hide assets

Some people try to hide assets to prevent the assets being divided in their divorce. However, hiding assets is illegal and can result in fines and jail time. Some people may think they can get away with hiding assets because their spouse is not involved with the household finances, but there are ways to find the truth. Avoid trying to hide assets, and consult your divorce attorney if you have reason to believe your spouse is hiding assets.

Fighting for the house at all costs

Many couples spend a lot of time, energy and money fighting over who will keep the marital home. Couples forget that maintaining the marital home often comes with mortgage payments and maintenance costs. It is likely individuals will experience a change in their standard of living after an expensive divorce, and for some, it may be a better financial decision to let the marital house go in favor of liquid assets and a more affordable house somewhere else.

Not having any financial plan

Having no financial plan can be one of the worst financial mistakes there are. It can lead to indulging in retail therapy or cashing in on investments to pay monthly bills. Instead, it is important to try to establish an understanding of your expenses, your income, and your financial goals. Using this information, you can establish a financial plan that will help you continue moving toward your goals despite your divorce.

Financial mistakes made during the divorce process can have a lasting impact on your future. This is why it is important to understand what the common mistakes are and how you can avoid making them.

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