There’s no doubt about it — going through a divorce can be an emotionally trying time. In addition to the emotional impact a divorce can have, it can also take a significant toll on post divorce finances. Consider how these steps may help you get on firmer footing:
Adjust your budget: A good place to start is to establish a budget that reflects your current monthly income and expenses. Calculate your new monthly income, including spousal or child support if applicable, and estimate what you expect to earn over the next year. If you are a stay-at-home parent or spouse, you may decide to re-enter the workforce to bolster your income. Or the time may be right to switch careers or seek a higher-paying job.
Next, look at your spending to see if you need to adjust your patterns. Also, evaluate your lifestyle spending to see if it’s necessary to trim your expenses.
Consider your children’s future: If you have children, they will understandably take center stage in your planning. It’s important to start thinking about how you’ll handle future financial milestones. Milestones may include paying for private school, college tuition or a wedding. If you’d like to help your children with such expenses, consider these questions: Will you receive financial support from your former spouse? Do you expect your kids to contribute?
Ensure you’re protected: An important step following divorce is to maintain, replace or establish insurance that will help secure your financial future. All forms of insurance should be reviewed and considered. Make sure you understand the specific benefits that you and your former spouse are entitled to, as well as the life, health and disability insurance policies that you both own through your employers. If you have children, whose health insurance plan will be used to cover them?
Change your beneficiary designations: After a divorce, you’ll want to change the beneficiary designations on any life insurance policies, retirement accounts, annuities, and bank or brokerage accounts you may have in place if you are permitted to do so. This is also a good time to make a will or update your existing one to reflect your new status. Make sure that your former spouse isn’t still named as a personal representative, successor trustee,
beneficiary or holder of a power of attorney in any of your estate planning documents.
Prioritize saving for retirement: No matter when you will retire, make it a priority to update your retirement goals and continue building your nest egg.
Dream and plan for the future: Once you have a handle on your new day-to-day finances and retirement, allow yourself to dream and plan for other milestones that are important to you. Whatever your dreams, determine the cost of each one so you know how much you’ll need to save. Save what you can each month, and keep in mind that even small amounts will add up over time.
Don’t go it alone: Professional guidance from a tax professional, estate planner, and financial advisor can ease the burden of managing your finances.
Ronald Lieberman, Esq. is a shareholder and partner at Adinolfi, Lieberman, Burick, Falkenstein, Roberto & Molotsky, PA in Southern New Jersey. Ron represents clients throughout the state as they uncouple all aspects of their marriage – including their finances. These issues are critically important and consequences which can extend out many years. Our firm has the experience and resources to help you navigate your unique situation.