How to Plan Your Finances After a Divorce
After a divorce, life can be difficult, especially where finances are concerned. Depending on the specifics of the divorce, you may have to reprioritize the money you have left, or you may have to figure out how to start all over again from scratch. Wherever divorce has left you, you need to continue looking forward and ensure your financial future is sorted out and secure.
Depending on your particular situation, you will need to go down a path of financial independence. Here are some financial planning tips to consider.
Know Where You Stand
Some individuals go through a divorce somewhat blindsided. Whether they did not expect the divorce to occur or did not have sufficient time to financially prepare for the split can certainly be a part of the equation that complicates matters.
Regardless of what happened, financial concerns should be one of the priorities. Ignoring the situation can be detrimental to your future, so no matter how difficult it may be to try getting back on your feet, it is something you must do.
It will be necessary early on to ensure your financial accounts are properly updated if you are maintaining control of them. You will need to alert your creditors and banks about your divorced status and update any changes of home address and contact information. If a woman plans to change her last name after a divorce, additional follow-up will be required, including obtaining a new Social Security card and driver’s license.
Reassess Your Responsibilities
Accounts to be maintained by you should be reassessed after the divorce as well the new expenses that will be forthcoming. Those who already have a source of income should construct a budget based on the total income received in a month and the amount of expenses going out. It will be important to ensure financial responsibilities can be met on one income. If not, cutting down on expenses will be necessary if a supplemental income is not possible. Those responsible for paying spousal or child support in addition to other financial responsibilities may find it difficult at first to make ends meet.
For those that have not previously earned an income, a divorce can change life significantly. In addition to having to secure employment, they have to be sure their income will be sufficient to meet their expenses while trying to adjust to a new life. There will also be some individuals that never took part in the daily financial life of their relationship, which will also be an adjustment.
Check In With Your Credit
During a divorce, your personal credit standing may suffer greatly depending on your joint account management and the status of your credit before the divorce. In order to forge ahead financially, you will need to reestablish your financial foundation by fine-tuning your credit. Order your reports and review them carefully to ensure you know what financial responsibilities are still on your plate. If you maintain a low credit score, you need to make sure you rebuild your credit by making payments on time each month, and be cautious of overspending. Don’t max out your credit cards and dig yourself deeper in debt out of despair.
Seek Professional Guidance
As a divorcee, your future needs will likely change a great deal. You will have to reconsider your retirement plans, estate plans, and your existing and future investments. Because all of this information can be very overwhelming, it is wise to seek professional advice from an attorney and a financial advisor for more complex matters.
Remember to keep copies of your divorce documents, so you will have quick access to the information concerning your finances. You’ll want to keep the documents in a safe location, keeping one copy in a safe deposit box. You should also have copies of your joint account information including your previous tax returns, health insurance information, property titles for the house or vehicles, and investments before finalizing the divorce to be sure you have all of the information you are entitled to receive.
Life can be difficult during and after a divorce. By taking control of your financial life from the start, you will be able to get back on track and have peace of mind you will be fine financially and capable of moving forward.