How Do I Adjust to Life Financially After Divorce?

by: Geoff Owen | Website

How Do I Adjust to Life Financially After Divorce?

The financial adjustment to divorce commonly gets pushed to the back-burner as the process unfolds. . This is understandable given the emotional toil and the nature of “putting out the fire immediately in front of you.”   However a divorcee’s long-term financial stability and life planning benefit from early recognition of financial matters.

The cornerstone of assessing your financial circumstance is developing a post-divorce budget. When preparing a budget, it is important to weigh non-discretionary unavoidable costs versus discretionary costs because it is probable that your lifestyle will be reduced at least temporarily. Expenses being established, then you should inventory your income sources such as earned income, income from investments, alimony, and child support.

The budgeting exercise should help you visualize the likelihood of goals such as your need for earned income or whether you can afford to remain in the marital residence. It may also help you foresee beyond the short-term, for instance with retirement planning goals. Lastly, such contemplations will hopefully lead you to consider matters like changing beneficiary designations on retirement accounts and revising your estate planning.

As a part of budgeting and financial planning, you will want to manage your debt to achieve financial freedom. This may be simple cost-cutting and aggressive debt reduction to more complex strategies of debt consolidation.

Similarly, your credit rating will be important to borrow at favorable terms when you need to. You should start by reviewing your credit report and paying bills in a timely fashion.

It is important to transfer risks when going through the divorce transition. You should conduct a full review of basic insurances like auto, home, and health to the more intricate like life and disability.

GEOFFREY OWEN, CERTIFIED FINANCIAL PLANNER™, CDFA TM, MBA

GreerWalker Wealth Management, LLP

Financial Advisor, Member New York Stock Exchange/SIPC

T 704.353.8258   //   M 980.428.2297