We see it every day – people get through the grueling process of their divorce and then put their finances on the back burner. Although that may be your immediate response, your financial decisions are all up to you now. You have to be prepared and understand your options.
Jumping into your financial situation is not always the most exciting thing to do post-divorce. However, it can save you from a potential disaster down the road. Believe in your ability to manage your budget and finances on your own but understand where your limitations are. If you decide you want support and help, do not be afraid to reach out to a professional for a second opinion.
There are six key areas that need to be addressed in a financial analysis.
- Your spending habits – sometimes called your “cash flow” – and your net worth. It may be tempting to start running up expenses starting the next phase of your life. Enjoy your newfound independence, but be cautious of where your spending limitations should be.
- Your insurance plans – life, health, disability, auto, home, and even long-term care. How much insurance do you need to address the “What If’s” of life? What if you get sick, what if you get sick and die, what if you get sick and don’t die? When you were married, you had a person you could rely on for help. Now that you are single, what’s your game plan?
- Taxes – your tax filing status is going to change from “married” to “head of household” or “single”. How much of an issue is that going to be? Understand your tax situation so you don’t get hit with any surprises during tax season.
- Your retirement projections – when can you retire and at what lifestyle? If you have already retired, will the divorce force you to spend less?
- Your estate plan – You are going to need to think past leaving everything to your spouse. Do not procrastinate adjusting your estate documents, and be sure to change the beneficiaries on all financial accounts and insurance.
- Your investments – What if you received a lump-sum settlement from your divorce? What if you no longer have much saved for retirement? Invest wisely to meet your financial goals, but also be conscious of the financial risks associated with different types of investments.
Whether you are in the middle of a divorce and considering settlement options, or your divorce is final and you need to create a financial plan for yourself, be sure to address these six key areas.
Because cookie-cutter solutions just aren’t good enough, Alternative Divorce Solutions provides financial advice tailored to your unique situation. If you want to discuss your financial situation during or after your divorce, please contact our office to set up a complimentary initial consultation.