Starting financially after a divorce is often hard, especially if assets shared as a mortgage were involved. Not to mention, it is not something that people usually prepare.
Here are some tips to help you regain your financial independence after a divorce, according to experts.
Check your finances
“Going through a divorce is often emotional and stressful, so it’s easy to lose sight of the resulting financial consequences,” says Shomari Hearn of Palisades Hudson Financial Group in Fort Lauderdale, Florida. “The first step to gaining control over your finances after a divorce should be to assess your living expenses, any outstanding debt you may have and your income, including any child support or child support,” says Hearn.
Trevor Scotto of Fiduciary Financial Group suggests setting your monthly bills and your bank account and credit card statements. “This can help identify possible spending habits that may need to be corrected, as well as payments that can be put into automatic payment,” says Scotto. “You may experience a significant reduction in household income, which may require you to make adjustments to your expenses,” he says.
Set up a financial plan
“The sooner you get a solid financial plan, the faster you can take the steps you need to make financial progress in the future,” says Monica Mizzi of Legal Templates. “Financial planning should embrace your short-, medium- and long-term goals, and the steps you will take to get there – including milestones to keep you motivated and on track.”
Consider a financial planner
If your spouse handled all finances during your relationship, starting over on your own can seem complicated. If you need help solving everything, a financial planner can help you get the right path to financial independence.
“An accredited financial planner can help you piece together the financial pieces of the puzzle and establish a game plan for your financial life after the divorce,” Scotto suggests. He says, “If you are new to managing your own financial affairs it is best to seek out an advisor who specializes in financial planning and can educate you along the way.”
Create a new budget
Jef Henninger, a New Jersey lawyer, says he advises his clients to use the divorce process as a reset button in their lives.
“Since you’re putting everything out there anyway, this is the best time to look at your spending and saving habits,” he says. “Seek professional advice if you need it, but use this as an opportunity to start over and change your habits.”
Jessie C., who has been divorced since November 2016, says creating a spreadsheet helped her budget. “I created a spreadsheet of the bills I had and when they should, and I use that to keep track of what I have to pay every time I get paid,” he says. “Keep track of your expenses and do not live above your means,” he says. “Just do things if you can afford them, even if that means you have to live in PB & J for a while.”
Update the title of the house
Once your divorce is final, you may want to remove your former spouse from the title of your home. This can be done by refinancing and executing a waiver deed. A divorce decree and a marital agreement agreement is necessary to do this. Experts recommend talking to your mortgage company for the next steps.
Get rid of any joint accounts
Personal finance and relations blogger Jeff Campbell says it’s important to eliminate all joint accounts to better protect both parties.
“From a credit rating standpoint, it is very important not to have outstanding accounts that are joint accounts, as it could be very easy for the former spouse to damage your credit or take additional credit under your name without your knowledge,” he says. “A clean break is the only way to proceed.”
Update your beneficiaries
Most of the time, people name their spouse their primary beneficiary in insurance policies and retirement accounts. If you are no longer married, it may be better to change that. “Update the beneficiary designations in your retirement accounts, such as a 401 (k) or an IRA, and your life insurance policies,” says Hearn. “You want to prevent these assets and benefits from happening to your former spouse upon your death.”
Keep a record of your documentation
If you decide to apply for a new loan after your divorce, you will need your divorce decree. It is important to keep all documents related to your divorce for your financial records. “This includes tax returns, mortgage documents, bank statements and all other financial records,” says Scotto. “Make copies of all financial records in case you need them on the road.”