By Bennett Whitlock, CRPC, ® Private Wealth Advisor
There’s no doubt about it – divorce can be an emotionally stressful time. In addition to the emotional effects that divorce can have, it can also be a significant financial burden. If you recently got divorced, now may be a good time to take a fresh look at your financial situation. Think about how these steps can help you get firmer:
Adjust your budget: A good place to start is by creating a budget that reflects your current monthly income and expenses. Calculate your new monthly income, including spouse or child benefit if applicable, and estimate what you can expect to earn over the next year. If you are a parent or spouse who stays at home, you can choose to get back on the workforce to boost your income. Or it is time to switch careers
or looking for a higher paying job.
Next, review your spending to see if you need to adjust your patterns. Whether you’ve decided to stay in your home or are looking for new forms of living, enter the numbers to see how much home you can realistically afford. Also, evaluate your lifestyle spending to see if there is a need to cut your spending.
Look at your children’s future: If you have children, they are understandably the focus of your planning. It is important to think about how you will deal with future financial milestones. Milestones can be the payment of a private school, tuition fees or a wedding. When looking to help your children with these expenses, consider the following questions: Do you receive financial assistance from your ex-spouse? Do you expect your children to contribute?
Make sure you are protected: An important step after the divorce is to maintain, replace, or establish insurance that will help secure your financial future. All forms of insurance should be checked and taken into account. Make sure you understand the specific benefits to which you and your ex-spouse are entitled, as well as the life, health and disability insurance that you both have through your employers. If you have children, whose health insurance is used to cover those children? Work quickly on creating an insurance plan to avoid the financial risk of not being insured.
Change the names of your beneficiaries: After a divorce, you want to change beneficiary names for any life insurance, retirement accounts, annuity insurance, and bank or brokerage accounts that you may have set up. This is also a good time to make a will or update your existing one to reflect your new status. Make sure your ex-spouse is not yet named as a personal representative, successor trustee.
Beneficiary or holder of a power of attorney on one of your estate planning documents.
Prioritize saving for retirement: No matter when you retire, make it a priority to update your retirement goals and keep building your nest egg. While retirement savings can feel overwhelming when you balance competing financial priorities, a plan can help you feel more in control.
Dream and plan for the future: Once you have your new daily finances and retirement in control, you can dream and plan other milestones that are important to you. While you were married, you may have set certain financial goals with your spouse. Now that you are alone, those goals may have changed. Would you like to travel abroad? Go back to school? Start a small business? Whatever your dreams, determine the cost of each one so you know how much to save. Save what you can each month, and remember that small amounts can add up over time.
Don’t go alone: Getting professional advice from a lawyer, tax advisor, estate planner, and financial advisor can make managing your finances easier. It’s hard to start over, but you can do it. A financial advisor can help you with the complex decisions you face during a divorce and offer strategies to help you achieve your new financial goals.
Bennett C. Whitlock III, CRPC®, is a Private Wealth Advisor and Managing Director at Whitlock Wealth Management, a private wealth advisory practice of Ameriprise Financial Services, Inc. Contact him at 703-492-7732 or visit whitlockwealth.com.
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