10 Steps to Financial Security After Divorce
Update Your Will
Your will needs to show your final wishes. First, you should name an executor to handle your estate and choose a guardian to take care of any minor children. Appoint a power of attorney to manage any health care and financial decisions.
If you don’t want your former spouse to inherit your retirement and assets after you pass away, then you need to change beneficiaries. A financial planner can assist you with this process. If you have a new living will, make sure to ask your estate lawyer who should be listed as primary and contingent beneficiaries.
Get All the Facts
Being educated is one of the most important contributors to making beneficial financial decisions. Look into finding a new team, including a divorce financial planner and accountant. They can aid you in understanding and tackling any financial issues you may have post-divorce, including cash flow, tax withholdings and child support.
Plan Out Goals with Your Divorce Financial Advisor
After a divorce, your situation has changed and so should your goals. Think about where you see yourself in the next five to ten years and how you want to invest your money. Setting goals might seem stressful and daunting, but take on the challenge as a way to create the life you want looking forward.
Determine a Budget
If you’re wondering where to start when it comes to setting a budget, don’t worry! Start by making a list of your monthly expenses and income, and then add up your total expenses. If your expenses are less than your income, you’re doing good. If you find that your expenses are higher than your income, find areas where you can scale back. Set a realistic budget with your divorce financial advisor and look closely at where you’re spending money.
Establish a New Financial Identity
In order to take on your own financial freedom, you need to consolidate your assets, update your Social Security information, close any old accounts and pay outstanding bills. Start building your own credit with new credit cards in your name. Lastly, don’t forget to fill out a W-4 with your new tax filing status.
Update Insurance Coverage
Remove your ex-spouse’s name from all your insurance plans, which includes health insurance, life insurance, homeowner’s and auto insurance.
Protect Your Retirement
The divorce rate has doubled in the past decade among couples ages 50 and older. Talk to your divorce financial planner about retirement income planning to ensure you have the funds to support your lifestyle after you enter into retirement.
By implementing an effective organizational system, you can easily access information you need to make key financial decisions. Be sure to keep track of important documents, tax information, and bank accounts.
Set Up an Emergency Fund
This step will make you feel less anxious and more secure about your future. Start an emergency fund that you can access in a time of unexpected illness, job loss, or any other unexpected situation. Think about disability coverage to cover expenses for illness or injury that might hinder you from working for an extended time.
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