8 Steps to Rebuild Your Financial Life After Divorce
July 25, 2018
A divorce can be financially devastating. Many people will lose half or more of everything they've saved over their lifetime.
This may include:
Additionally, divorcees often see their income wither while their expenses explode. Without a doubt, divorce is bad news financially.
However, all is not lost. In fact, there are plenty of ways to improve your situation significantly. Specifically, if you've gone through a divorce recently, here are eight ways to get you back on track as quickly as possible.
Do Not Panic or Waste Energy
We know this is much easier said than done, but you need every ounce of energy you can muster to rebuild your financial life.
Don't waste time worrying, it doesn't help.
You are not powerless.
You have many choices.
Don't sap the energy you need to get things back on track.
Inventory Your Financial Life
Whether or not you understand how finances and investments work it doesn't matter. In time, you will improve your knowledge.
Right now, it's time to account for where you are by putting together an inventory of your financial life:
I suggest you create a little spreadsheet or loose-leaf binder for each one. For each sheet make a line item entry with the type of account, amount, who owns the account, what the rate is and the contact information at each institution. You will be surprised at how empowered you feel after getting these in order and understanding your finances.
Knowledge is power, friend-take advantage of it.
Tap into your credit reports once a year, it's free! Although you can't check your spouse's without their knowledge, it's still a good idea to persuade your spouse to go over both your credit reports before the split.
Balance Your Budget
It is extremely important to keep track of inventory regarding your income and expenses. After a split, it may take time to re-adjust your new income/expense story. During the adjustment period, it's easy to dig yourself into a debt pit without proper balancing of your budget.
It's okay if you're unsure about your average spending, but start to keep track now. With it, you'll know if you need to cut back or get back into the workforce unless your situation is stable.
If your spending exceeds your income, it may not be pretty. But you are better off knowing what the situation is than ignoring it.
Make Sure Your Accounts Are Set Up Correctly
If you are divorced, your legal representative is responsible to advise you on how to take title to your accounts and also, who the beneficiaries should be on your accounts (most important for retirement accounts).
Don't try to be your own attorney. Find good and sound legal advice when it comes to proper vesting and naming your beneficiaries.
Divorce often comes as a shock. It feels as if everything is coming at you all at once. That's understandable but dangerous. People with too much on their plate can become overwhelmed and freeze up.
If you found you don't have enough income to balance your monthly budget that has to be your first priority. If you (and your children, if any) depend on your ex-spouse for continued support, make sure they are required to buy life insurance and name you (+ any children) as beneficiaries.
If budgeting isn't the biggest problem, great. What do you want to focus on? Improve your finances? Finding new work? Moving? Make yourself a list of everything you want to accomplish and make an action plan/time frame.
Pick Your Team
It can be difficult to put yourself back together financially. If your situation requires it, don't be shy about getting expert tax, legal, and financial advice.
Make sure your team empowers you and makes you feel comfortable. This is a hard time, find a team that can support you in all aspects. If you feel intimidated or confused, move on, it's your money. You have the right to expect a professional team.
You'll learn a great deal about finance when you start taking inventory, balancing your budget, creating a priority list, and assembling a strong team. Devote 20-30 minutes a day to expand your education. Never stop, keep the wagon rolling. Use your resources. You can never learn too much.
Take these steps and you'll be on your way to a more solid financial footing than when you first divorced. If you really want to be ahead of the herd, create a financial plan for yourself.
A financial plan tells where you'll likely end up if you continue on your current path and what you might want to do differently in order to have a different outcome. Of course, if you already have a financial plan, keep it up to date so it can reflect the changes in your financial situation.
These eight steps won't change your life overnight, but over time it can improve your situation drastically. In the meantime, empower yourself:
There is nothing you can't do.
Take a breather.
Rebuilding your life after a divorce isn't as hellish as it seems. If you're in need of legal advice regarding your divorce contact David Veliz at Veliz Katz Law. You don't have to rebuild your life alone, the team at Veliz Katz Law can help rebuild your life with you. To read the full article by Neal Frankle from Credit.com check it on here.