5 Steps Everyone Should Take To Reassess Their Finances After A Divorce
There’s plenty of things that you begin to doubt when you’re going through a divorce. Make sure your personal finances aren’t one of them.
All too often, those enduring divorce fall victim to dramatics and heated emotions, leading to rash decisions. Gain control of your future by knowing the appropriate route to take when moving forward. Make the most of your monetary assets, realize exactly what you should protect and move on more quickly in terms of your fiscal livelihood instead of floundering in legal debt or getting stuck in the past.
If you’re looking for some helpful advice for where to start when assessing your personal finances, you’ve come to the right place. Take the first step by reading on to expand your knowledge base and improve your understanding of the financial impact of divorce.
Re-Examine Your Monthly Expenses
Now that you’re surviving on a single income, it’s vital to know exactly where your money is going each month. No matter what, the first step to guarantee financial success is to live within your means. Be realistic about what you’re able to afford and make sure to take into account new responsibilities, like alimony or child support.
Between the mortgage, property taxes, car payment and utility costs, things can add up quickly. Being newly single, you have the power to manage your finances and control what cash flows in and out. Take time to assess your monthly expenses and identify any areas where you can cut back. Reduce your current car debt by trading in your current ride for an older model or curb monthly mortgage payments with refinancing so that expenses better fit your new lifestyle.
Create A Budget
Following divorce, you may need to adjust your spending habits and learn how to manage your money on your own, which is often an emotionally stressful task. However, establishing a budget ahead of time can help ensure you’re financially prepared to take on living expenses.
When planning out your financial plan, try using popular and proven methods like the 50/30/20 or the sub-savings account budget. If you’re less likely to keep a vigilant eye on your own spending, try out an automated budgeting tool you can use right from your phone. Whichever way you choose to allocate your funds, monitoring your spending will help you stay on course.
Update Your Personal Information
After a divorce, you may need to overhaul most of your personal info. It’s important that all your financial documents reflect this new stage of life. Similarly to revising your license when you move residences, if you change your last name back to what it previously was or to something different, your financial documents should match your current situation.
Additionally, you should update other information on things like insurance. Your beneficiaries may change drastically so revise those as soon as possible. Reassess each of your legacy assets instead of leaving your financial future up to your ex.
Consider Your Insurance and Benefits
When you go through a divorce, much of your insurance information has probably changed, especially if you were previously included in your ex’s benefit package at work.
If you’re employed, reach out to your company’s HR director to see what kind of options are open to you as an employee. This is the route many people choose to go due to the ease of access and the benefits provided. There’s also government-provided insurance on things like healthcare that can help paying for plans much more affordable.
Consult A Professional
Throughout a divorce, you’ll likely have to recover documents filled with legal jargon and follow unfamiliar procedures like arbitration or child custody trials. Talk to a lawyer and certified divorce financial analyst to guide you through each step. They will help make sure you’re handling your legal responsibilities and finances correctly both before and after you sign on the dotted line or agree to certain terms. They’ll also be able to talk about taxes, guide decisions regarding your separation and help manage your assets for your future lifestyle.