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Thinking of a Divorce? Make Sure You Can Access Cash!

Candance Bahr and Ginita Wall, CPA, CFP®

As soon as you begin divorce proceedings, things can move quickly, and you won’t always be able to predict how your spouse will react. If your spouse is in charge of your family’s finances or even has access to joint accounts, you could find yourself suddenly cut off from your money! Do not put yourself in a position where you will need to rely on your spurned spouse for money or where your spouse could use the threat of turning off the money tap as a negotiation tactic.

 Empower yourself by making sure you have access to money before your divorce that you can use to:

  • Move out if you need to
  • Support yourself during the divorce
  • Hire a divorce attorney
  • Pay divorce-related court costs

 How to Build Up Your Cash Reserves

The easiest way to build up your cash reserves is to open up a checking or savings account in your name and begin depositing as much of your income into it as you can. Don’t forgo paying the important bills, like your mortgage or student loans. The last thing you want is to deal with collection agencies during your divorce!

 Likewise, do not poach money out of shared bank accounts. You’ll eventually need to close these accounts and divide the funds according to your divorce settlement. If you empty the accounts before the divorce, your spouse may accuse you of trying to steal money.

 Open Your Own Credit Card

Now is also a good time to apply for a credit card in your own name if you don’t already have one. You’ll want to close shared credit cards when you start the divorce proceedings, and you don’t want to find yourself without any financial cushion if you should face a sudden expense, like a car repair. Using credit cards in your own name is also a good way to begin building up your individual credit. is a great resource for comparing different credit card offers.

 Borrow Money

Expenses can mount quickly during a divorce. Rather than put all these expenses on your credit card where you can face high-interest rates, consider borrowing the money from a different source.

Many banks offer personal loans that don’t need to be earmarked for a specific expense. If you can, apply at your local credit union where interest rates will be lowest. You may also consider taking a distribution from your 401(k). You can do this one of two ways. Some employers allow their employees to take out a hardship loan of up to 50% of their 401(k) balance to be paid back over a period of time (usually five years). Interest rates on this type of loan will vary. As a last resort, you can take a withdrawal from your 401(k) plan or IRA. You do not have to pay back this withdrawal, but you will pay income tax on the amount you take out along with a 10% withdrawal penalty if you are younger than 59 and a half years of age.

 A final option is to seek a loan from your parents, sibling, or other family members if they are able. It may be difficult to ask for help, but that’s what family is for. Even if they can’t necessarily loan you money, perhaps your family can offer you a free roof over your head for a couple of months to help lower your expenses.

 Be Ready

A divorce has long-ranging financial implications. Building up some cash reserves will give you the freedom to pursue your divorce without facing crippling money worries. More freedom means you have the time, focus, and ability to seek a settlement that is more favorable to you. If you suspect that your spouse may be thinking of a divorce, you can follow these same tips so you aren’t blindsided.

One of the best ways to prepare for a divorce is to attend a local Second Saturday Divorce Workshop where you can hear from divorce experts and receive advice on your specific situation. Look for a divorce workshop in your area today. 

 This article is reprinted with permission from the Women's Institute for Financial Education (, creator of the Second Saturday Divorce Workshops. Founded in 1988, WIFE is a non-profit organization dedicated to providing financial education for women. Copyright 2019