6 Tips for Financial Success After Divorce
Experienced Certified Divorce Financial Analyst™ (CDFA) Provides Advice
Divorce is difficult for all involved parties – the divorcing couple, their loved ones, their children – but it is also an opportunity to improve your life. Everything changes in divorce, from your daily routine to your long term plans. With this change comes the opportunity to re-evaluate your financial plan and fix any bad habits that have been plaguing your life in the past. Whether you have accumulated debt, failed to properly save, or lost track of your money, divorce allows you to regain some financial confidence in an ever complex financial world.
Here are my top six tips and suggestions for divorcing parties who choose to use their divorce as a launching pad to financial success.
- Know the whereabouts of both your and your spouse’s money. Is it invested in retirement funds? Is it being managed by a broker? Is it being self-managed online? Do you have an emergency fund? Is your money tied up in real estate? College savings plans for the kids? You will need the complete picture.
- Create a new investment plan. If you had cash and retirement assets before your divorce, chances are you have less now. That means that you will need to be vigilant in your investment strategy. You may wish to consider moving away from broker fees and fund manager commissions and into no-fee investment options such as “robo-investing.” Perhaps you are now eligible for the tax-magnificent Roth IRA? How about taking advantage of the free investment services offered by big investment houses such as Schwab? How about reading a good book on investment and money management such as those by Jane Bryant Quinn (‘Making the Most of Your Money”) and Thomas Stanley & William D. Danko (“The Millionaire Next Door”). Sometimes, what is needed in a divorce – even more than a high priced divorce lawyer -- is a good financial planner and time spent studying your options to help you make smart money-management decisions.
- Use a budgeting program such as Quicken Online. This will help you keep track of your day-in and day-out spending habits, while also showing where improvements can be made to help you make realistic adjustments in your new life as a single person.
- Always pay yourself first! Save, save, and then save some more. Putting money into your savings and watching it grow is both rewarding and reassuring.
- Treat your house as an investment, as well as your home. Don’t overspend on improvements unless you truly believe they will increase the value of your home – unless you plan to stay there for a very long time and have enough money in the bank to comfortably treat yourself in this manner.
- Avoid debt like the plague! Educate yourself on the inner workings of credit cards and automobile debt. Digest all possible information before making large purchases that have a significant effect on your credit.
Divorce is tough, but it is an opportunity to take a fresh look at your finances. While re-evaluating your financial plan, you have the chance to educate yourself and figure out the best use of your financial assets and make investment and budgeting choices that will serve you well in your life, both now and in the future.
By Steven Seril, Mediation, Marketing & Research Assistant &
Robin L. Graine, JD, CDFA