by Catherine Allen~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’s important to be aware of how your financial position will be impacted. Now, more than ever, you need to make sure that your finances are on the right track. You will then be able to put the past behind you and set in place the building blocks that can be the foundation for your new financial future.
Assess your current financial situation
After divorce, you’ll need to get a handle on your finances and assess your current financial situation, taking into account the likely loss of your former spouse’s income. In addition, you may now be responsible for paying for expenses that you were once able to share with your former spouse, such as housing, utilities, and car loans. Establish a budget to track your monthly cash flow.
Reevaluate/re-prioritize your financial goals
Your next step should be to reevaluate your financial goals. Goals you set while you were married may have changed. Start out by making a list of the things that you now would like to achieve. Do you need to put more money towards retirement? Are you interested in going back to school? Would you like to save for a new home? Which of these takes priority? If you have debt, put a plan in place to pay it off as quickly as possible.
Divorce can have a negative impact on your credit rating. Take steps to try to protect your credit record and/or establish credit in your own name. Review your credit report and check it for any inaccuracies. Are there joint accounts that have been closed or refinanced? Are there any names on the report that need to be changed? Get a free copy of your credit report once a year from each of the three major credit reporting agencies at https://www.annualcreditreport.com.
Review your insurance needs
Insurance coverage could be negotiated as part of a divorce settlement. When it comes to health insurance, make having adequate coverage a priority. Now that you’re on your own, you’ll also want to make sure that your disability and life insurance coverage matches your current needs. Also make sure that your property insurance coverage is updated.
Change your beneficiary designations
You’ll want to change the beneficiary designations on any life insurance policies, retirement accounts, and bank accounts you may have in place. This is also a good time to make a will or update your existing one to reflect your new status.
Consider tax implications
You’ll also need to consider the tax implications of your divorce. Your sources of income, filing status, and the credits and/or deductions for which you qualify may all be affected.
Consult a financial professional
Consider consulting a financial professional to assist you in adjusting to your new financial life. In addition to helping you assess your needs, a financial professional can work with you to develop a plan designed to help you address your financial goals, make recommendations about specific products and services, and monitor and adjust your plan as needed.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information provided is not intended to be a substitute for specific individualized investments, tax planning or legal advice. We suggest that you consult with a qualified tax, legal advisor, and financial professional.