Divorce is a challenging and emotional process, and it can be difficult to think about the future and your financial security when you’re going through proceedings. However, it is essential to take steps to plan your finances after your divorce to ensure a stable future. Below are some financial tips for the recently divorced.
1. Create a budget: Create a budget that reflects your current income and expenses and how this might change. It’s important to have a clear understanding of your cash flow to ensure that you’re not overspending or living beyond your means. If you’re likely to receive child support or spousal maintenance payments, factor this into your budget. On the other hand, if you’re going to pay child support or spousal maintenance payments, make sure it’s factored into your budget.
2. Close joint accounts: Close any joint accounts you and your spouse had and open new ones in your name. This will ensure that there is no question about your liability for any debts that your ex-spouse incurs in the future.
3. Reassess your goals: Your life goals and the purpose driving them will change after a divorce, so it’s important to reassess. Consider your short-term and long-term financial goals, such as saving for a down payment on a home, paying off debt, or investing for retirement. The goalposts may have shifted now that you’re on your own so it’s important to take a step back and review.
4. Update your estate plan: Review and update your estate plan, including your will, power of attorney, and beneficiaries on your superannuation accounts. This will ensure that your assets are distributed according to your wishes.
5. Meet with a financial adviser: Consider meeting with a financial adviser to help you create a financial plan that aligns with your goals and current situation. They can provide guidance on topics such as investing, retirement planning, and debt management but also provide you with much-needed clarity on your pathway forward. It can also pay to have a financially minded professional on hand when undertaking initial negotiations, so you know the long-term impact of any decisions made during settlement.
In conclusion, financial planning after a divorce is critical to ensuring a secure financial future. By addressing the above, you can take control of your financial situation post-divorce and make confident life decisions on the way forward.
Sean Hocking works with individuals and their families to provide peace of mind and clarity around their financial future. Having a roadmap in place that clearly articulates what’s important in the years to follow gives his clients the confidence to make clear and informed decisions throughout their financial life journey.
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