If you’re in the early stages of divorce, you’re probably experiencing anger, betrayal, loss, shock, numbness, confusion, panic –or a combination of them all –and it may seem like you’re on an emotional rollercoaster, feeling “up” one minute and “down” the next.
Over time, though, these emotions will begin to stabilize, as you set your sights firmly on a bright, new future as a single woman. Clearly, your life will be different. But adapting to –and even embracing –these changes will help ensure your success. For example, as a single woman you will now be in control of your personal finances. You will have to keep a careful eye on your income, expenses and debt, if you have any. You’ll have to pay your bills, save and invest for your retirement, plan for college if you have children, map out other long-term goals –and plan for the savings and investments you will need to help you achieve it all.
Naturally that list of responsibilities may seem a bit daunting at first (particularly if you weren’t very involved with the family finances while you were married), but I assure you: You can do it! Take it step-by-step, learning as you go, and it’s likely you will find –as most women do –that it’s empowering to make financial decisions and to be the one who’s in control of your financial portfolio. Of course, working with a financial advisor who has the experience and training to specifically help divorced women accomplish their goals and objectives can be extremely helpful. Careful and conservative investments coupled with living within your means are the keys to making your divorce settlement last as long as it possibly can.
What can you do to stay on the best path forward? Here are a few key steps to get you started towards financial stability post-divorce. Once your divorce settlement agreement is finalized, you will need to:
Update accounts. Even though it may sound mundane, this financial housekeeping step is absolutely essential. If you changed your name as a result of the divorce, you’ll need to get a new Social Security Card, driver’s license, passport and credit cards. You’ll also need to notify your bank, utilities, insurance companies, credit card companies, the motor vehicle department, your children’s school(s), etc. about any change of name and/or address. The titles on all assets, such as cars and houses, will have to be modified and recorded with mortgage companies . . . and it’s likely you’ll want to update beneficiaries on your life insurance, 401k, pensions and IRA accounts, as well.
See the checklist below for an overview of many of the accounts and policies typically needing prompt attention post-divorce.
Develop a comprehensive financial plan. If you had a Lifestyle Analysis prepared during your divorce, you should have a very clear understanding of what funds came into the marriage (income) and what funds went out (expenses). Use this as a basis for developing a budget going forward. Of course, you’ll need to keep tabs on financial matters in the short-term (What are your day-to-day expenses? How much are monthly utilities, the mortgage, car payments, etc.?), and you’ll need to establish a plan for the long-term, as well (Who is going to pay for college tuition? What do you need to save for retirement?). If your divorce settlement agreement included any lump sum payments (for alimony, pension rollovers, sale of a vacation home, etc.), you’ll also need to develop a sound strategy for management of these assets. Establishing –and then sticking to –a financial plan is essential for financial stability . . . and peace-of-mind.
Build your credit. Good credit forms the foundation of your financial portfolio and will help you secure loans in your name in the future. The first step in building good credit is to get a copy of your credit report. (AnnualCreditReport.com offers them for free.) Your current credit score is the starting point for your future, so make sure you address any inaccuracies in the report. If you are employed and/or already have credit cards in your name, the process of building your credit will be relatively straightforward. Use your credit cards regularly, pay off the balance on time each month, and you’ll watch your credit score rise. However, if you’re not employed and don’t already have a credit history in your name, the process is not as simple. New federal regulations are making it more difficult than ever for women with little or no income to establish credit on their own, so prepare yourself for the possibility that securing credit could be somewhat time-consuming and is likely to require more than simply filling out an application or making a single phone call.
Seek help from an experienced financial advisor. Even more specifically, look for a financial advisor who is trained and experienced in working with women post-divorce.
All of the fundamental components of a sound financial plan– creating a budget, investing, planning for retirement, making sure you don’t outlive your money, understanding your goals and aspirations (travel, leave money to children, grandchildren and/or charity, etc,) saving for college, life insurance, etc. — should be completed under the guidance of an investment professional/advisor who is very familiar with the needs and issues of divorced women.
Remember: The financial needs of a divorced woman are very different from those of a married couple and you must have an advisor who completely understands those differences and knows how to properly manage your money and invest on your behalf.
For example, just as women all over the country depend on Bedrock Divorce Advisors, LLC to help them before and during their divorce, many of these same women (and others, too) rely on our sister company, Bedrock Wealth Management, LLC, post- divorce to help them make their divorce settlements last as long as possible.
Using our many years of experience and specialized training, we assist with a wide range of financial concerns, including:
- Retirement planning
- Asset protection and insurance
- Estate planning
- College savings
Add other experienced professionals to your post-divorce team, as well. In addition to an experienced financial planner, I believe most post-divorce women can benefit from the assistance of:
- An estate-planning attorney. This type of lawyer will work in conjunction with your financial advisor to help you with your estate planning needs and the legal issues concerning your will, medical directives, trusts, charitable giving, etc.
- A therapist or counselor. A compassionate therapist will help you cope with the emotional challenges associated with starting your life as a single woman.
- A vocational counselor. Need some tips for re-entering the job market? Or, perhaps you want to start your own business? A vocational counselor can provide the guidance and know-how so you make these transitions successfully.
Check and double-check to make sure you’ve completed everything on this post-divorce “To Do” List:
1. Obtain a copy of your certified divorce decree. Make extra copies, and store them in a secure location.
2. Close any joint credit accounts.
3. Remove your husband’s name and/or change your name/address on all remaining accounts, including:
- Bank, brokerage and investment accounts
- Credit cards
- Driver’s license, automobile title, registration and insurance policies
- Employer’s records
- IRS records
- Life, health, homeowner’s and disability insurance policies
- Post office (Remember to have your mail forwarded, too.)
- Professional licenses
- Social security card
- Title to real property
- Utility bills
4. Research your health insurance options and apply for COBRA, if necessary.
5. If your divorce decree requires
- a Qualified Domestic Relations Order (QDRO): Provide the QDRO to appropriate banks, brokerages, pension plan advisor, 401k administrators, etc. (Even better, have this step completed before your divorce is finalized!)
- a quitclaim or warranty deed: Make certain the appropriate documents are executed and recorded.
- the transfer of title to property (automobiles, boats, etc.): Complete the transfer by signing and delivering the necessary documents.
6. Open a new bank account. Consider establishing direct deposit or income withholding for child support, spousal support and/or alimony payments.
7. Open a new credit card account and request a copy of your credit report.
8. Disinherit your husband. Write and execute a new will, trusts, medical directives and/or living wills and powers of attorney. Don’t forget to change the beneficiaries on your life insurance, 401k, pension and IRA accounts.
9. Establish a system to keep track of all child support made/received, alimony payments made/received, medical expenses, etc.
Enjoy your new life. Once you complete the previous six steps, you will be well on your way to establishing a secure financial foundation for your future. After all, nothing nurtures self-confidence like firm footing and a solid plan, one that offers you positive reinforcement every step along the way. You’ll learn to stick with a budget, strengthen your credit score and manage your assets. Then, you’ll be able to set new goals and achieve even more.
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