Among the biggest causes of Bankruptcy is divorce. Not only can it lead to significant legal fees, the spouses usually find themselves paying for two households rather than one while still making the same combined income. One party may not have the ability to keep paying for their house on a single income. The problems not only hit lower and middle income earning couples, they can also lead to problems for the relatively wealthy. In a circular way, it is also money problems that lead to marital discord and divorce. In a recent article on Clark Howard’s website, Farnoosh Torabi listed some tips for avoiding problems. Here is a brief summary of the tips:
- One person should be the “Chief Financial Officer” for the home to manage household finances. However, the other spouse should not be in the dark, and the job can be rotated every few months.
- Automate finances as much as possible (but do not pay monthly bills via auto-debit). Each party can then check online for account balances, etc.
- Each spouse should have full access to accounts, passwords, statements and bills even though one serves as the “CFO.” Stay transparent, and use a free site such as Mint.com to create a budget and track spending.
- Each person should have their own small bank account for personal use, even though most finances will be run through a joint account. (SR Note: If one party has financial problems, such as outstanding judgments, it may be important to maintain separate accounts so a joint account will not be subject to garnishment).
- Make big financial decisions by committee and discuss any large purchases before making them.
Although I often disagree with Clark Howard on various issues, his website is a source of a lot of good information on budgeting and other consumer issues.
Photo Credit: Clarkhoward.com.