How to Manage Your Finances After a Divorce
The reality of managing finances after a divorce is a scary prospect for many men and women. Perhaps budgeting was delegated to your partner, and now you have no clue how to proceed on your own. While you may want to take a long vacation after a divorce, can you really afford it? Make sure you understand your financial situation first, before making any big decisions.
Here are 10 tips for managing your finances after a divorce:
- List out your goals. Do you want to pay off the mortgage? Prepare for retirement? Travel to Europe? Treat yourself to a new watch? However big or small, Identifying these short and long term goals will allow you to understand what you need to do, and how much you need to put away in order to accomplish them. It will also give you something to look forward to.
- Automate your savings. Doing so will help you feel confident about your finances during good and bad times. Some examples include automating withdrawals from your checking account to be directed into savings and investment accounts one day after payday.
- If you don’t have investments or any investment accounts, talk to a consultant at your local bank who can explain how to put your money to work. Saving money is always great, especially for emergencies. But you should also know what options you have when it comes to investing.
- Review your spending by setting up a budget so that your monthly expenses remain well below your take-home pay. To create a budget, list your income sources and expenses. There may be new expenses after your divorce. Be sure to take work, marital support, child support, and investments into consideration.
- Consider working with a financial planner to help you analyze your post-divorce situation. While this service will come at a fee, you’ll have a clear picture of your current financial situation. Ask your friends and family if they can personally recommendation someone they use so you can feel more comfortable about the process.
- Cancel and close every joint account you had with your ex-spouse. Joint accounts that remain open may land you in debt if your ex decides to run up the charges on credit cards or overdrafts a bank account. Call the bank and credit card company to let them know you want to suspend the account to prevent future charges.
- Change the beneficiaries on your accounts otherwise your ex could end up with your IRA, 401(k), and other assets when you pass away.
- Likewise, get all assets in your own name. If you kept the house after the divorce, refinance in order to remove the name of your ex-spouse.
- Use an app or online interface to track your expenses, income, assets, and liabilities. All you have to do is sync up your various bank and credit card accounts, and you’ll be able to monitor your money 24/7.
- Learn to live within your means. Your budget will be a big help in guiding you along the way. In post-divorce situations, one of the biggest challenges is adjusting to a different lifestyle. Going back to a single-family household means you’ll have to live on less money. This may mean less travel, shopping, and hobbies for both yourself and your child(ren).