financial literacy

10 Steps to Financial Security After Divorce

Barbara Rowens

October 2, 2017

Most individuals dealing with divorce are worried how their financial landscape will change durring or after the final separation. Whether you’re wrestling with a possible divorce or are newly divorced, the ten steps in this post-divorce guide can help you feel confident and in control of your financial future.

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.

Change Beneficiaries

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.

Being educated is one of the most important contributors to making beneficial financial decisions.

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.

Setting goals might seem stressful and daunting, but take on the challenge as a way to create the life you want looking forward.

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.

Start an emergency fund that you can access in a time of unexpected illness, job loss, or any other unexpected situation.

Stay Organized

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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For most people, the divorce process is emotionally draining and mentally exhausting. Even if you feel like you are clear headed, here are a few of the most common money mistakes to look out for when getting divorced.

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As a CDFA® and divorce mediator, we serve individuals and couples who are facing divorce, by providing smart financial solutions for your amicable settlement and asset separation.

 

As a CDFA® and divorce mediator, we serve individuals and couples who are facing divorce, by providing smart financial solutions for your amicable settlement and asset separation.

 

As a CDFA® and divorce mediator, we serve individuals and couples who are facing divorce, by providing smart financial solutions for your amicable settlement and asset separation.