It’s no secret that in the midst of a pandemic, the divorce rate has increased. Whether it’s directly related or simply a coincidence, many of us are beginning to start over. From credit card bills to possibly even a new home, taking time to adjust your mindset and budget is extremely important. If you’re newly divorced or have been for a while, you have most likely found your current financial plan no longer makes sense or suits your lifestyle. It’s crucial to get a handle on these details, and manage the logistics of your finances. Here are a few tips to handle your assets like a pro through the transition and managing your finances after divorce.
Create a Budget
Being aware of how much money is coming in and how much money you are spending on non-negotiable bills is crucial. This information will give you the basis of a solid budget. Without keeping track of your monthly bills and steady income, it can make it extremely difficult to have a solid and accurate jumping off point.
Luckily, there are plenty of ways to get a quick understanding of this. In the age of technology we‘re blessed with the convenience of phone applications and websites with the necessary tools at our fingertips. Utilizing an online platform to budget your finances is a great way to jumpstart your fresh start. Take a step back and set goals for yourself and family. Consider things like, are you saving for your child’s college? Are you budgeting for a new car? Is your money going to a streaming service or subscription you’re not even using? Once you have the allocation part tailored to your lifestyle, you’re able to move forward. Input your earnings and begin designating your money to the areas of your life that need it. Don’t forget about rent or mortgage payments too!
Take a Look at Your Real Estate
Now, time to focus on your living situation. A major dent of our income goes towards housing, so it’s imperative to take time to relook at your current reality. Switching from a two income household to a one income household can affect your finances greatly, especially when it comes to real estate. Decisions need to be made. Will you move out? Will you downsize? Or will you stay put? Once you come to your decision, you can begin to look at the money needed to make it happen.
If you choose to stay in your marital home and not move out, it might be time to get crafty with your mortgage to save you money. Refinancing your mortgage has numerous benefits that can help you save more and pay less in the long run. By refinancing, many have the opportunity to receive a lump sum payment while potentially even decreasing the monthly mortgage payment. If you decide to move, consider rightsizing or even relocating to a new location with more affordable real estate. A major adjustment is inevitable, so by accepting this you will have a better chance to make a smart decision for your lifestyle and handle your money wisely.
Update Your Records
After a divorce, your records must be updated to reflect the change. More specifically, records where your ex-spouse was listed as a beneficiary. Review your health benefits and life insurance policy and reach out to your providers to make the necessary adjustments. An important document to keep handy (not just for your own records) is your final divorce certificate. Some providers may request a copy as proof of your divorce. Other documents to consider reviewing are your 401k and IRA accounts, adjusting/establishing TOD accounts (transfer-on-death brokerage accounts) and POD accounts (Payable on death bank accounts).
Ask for Help
Amidst organizing your divorce documents and possibly making a decision on moving, it can become overwhelming very quickly. You are not alone in feeling this way. It’s important to remember that! Reaching out to family or friends who have also been through a divorce can give you advice on not only what has worked for them but what has not. Although everyone’s situation is different, a new perspective and insight on similar situations can help you make the right decisions for yourself and your family.
If you’re not getting the help and clarity you need from your immediate support system, look into hiring a financial advisor. Having a professional financial consultant can help you navigate your current situation and assist you in the steps to get your financial goals met. They can give you a clear path for your new income and spendings.
Managing your finances after divorce can feel overwhelming and isolating. Fortunately, there are plenty of ways to navigate these unfamiliar waters. Using the tools mentioned above can guide you as you take on the next chapter of your life and your journey to financial stability.