Adjusting to Life Financially After Divorce
Going through a divorce can be an emotionally difficult time. Ironing out a divorce settlement, attending various hearings, and dealing with attorneys can weigh heavy on all individuals involved.
In addition to the emotional impact, individuals and families are left trying to assess how their financial position will be impacted. It is vitally important as you walk through the divorce process that you make sure your finances are on track. It is equally important to begin cultivating a relationship with a financial advisor who can assist in identifying any gaps in your financial position as a result of your circumstances as well as help you begin to set in place the building blocks for your new financial future.
Below are a few steps to help you get started in reviewing your new financial future:
Reevaluate/reprioritize your Financial Goals After setting a new financial roadmap, it is important to reevaluate your financial goals. While you were married, you potentially set joint financial goals with your former spouse. Now that you are on your own, these goals may have changed. As a first step, begin by making a list of the things that you now would like to achieve financially, i.e. accumulating an emergency fund, buy a new car, save for your children’s college education, begin planning for your retirement.
Take Control of your Debt As you are adjusting to your new budget, be sure to evaluate your debt and credit. A debt reduction strategy will be helpful in outlining a plan to tackle and eliminate any outstanding debt accumulated prior to or during the divorce process.
The first step to tackling any debt is to keep track of balances and interest rates. Once you know the balances and interest rates, you can develop a place to manage payments, avoid late fees, and pay off high interest debt first. Another option may be to consider debt consolidation or refinancing options.
Review Insurance Needs Typically, insurance coverage is negotiated as part of the divorce settlement. It is important to review health insurance, making adequate coverage a priority for you and your family. You may also want to review your disability and life insurance coverage to ensure it matches your current needs now that you are on your own. A good place to being is by inquiring and evaluating any coverage offered through your employer. Finally, make sure your property insurance is updated to reflect any changes made as a result of the divorce.
Change your Beneficiary Designations After a divorce, it is vitally important that beneficiary designations be changed on any life insurance policies, retirement accounts and bank or credit union accounts you may have in place. Bear in mind that some settlements require a former spouse to remain as beneficiary on a policy, in which case you cannot change.
This is also a good time to update your Will, Power of Attorney, and other legal documents you may have in place to reflect your new status.
A financial advisor will walk you through each of the steps above. By cultivating a relationship with an advisor early in the process, you will benefit from having him or her as a sounding board and someone to offer professional guidance and advice. Since the process of divorce can be so emotionally trying it would be advantageous to have one more person in your corner!
The article above is written and presented by Jae Waters, CFP® and Maleah Stephens, CFP® of Royal Alliance Associates. Jae is in his sixteenth year of practice in the financial services industry. Jae’s philosophy when approaching clients is simply to put the client’s goal and objectives first. He tailors different strategies around what is important to his clients. Maleah is in her eight year in the financial services industry. Her philosophy is to educate her clients and walk them through a step-by-step consultative approach regarding every aspect of their financial life. Jae and Maleah work together as a team and approach new clients with a team mentality. Together they have over 20 years of experience. For more information on their practices visit, www.wpwealthmanagement.com.
Jae Waters and Maleah Stephens "are a Registered Representative (s) of and offers securities products & services through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered broker-dealer.
Advisory services offered through Royal Alliance Associates, Inc., a Registered Investment Advisor.