Ending a marriage can result in many changes to your life, especially when it comes to your finances. While you’re going through the divorce process, it’s important to develop a comprehensive financial plan for your post-divorce life. By taking a few critical steps, you can make sure you will be financially secure after your divorce and through retirement.
Here are 10 tips on how to survive financially after divorce:
1. Create a post-divorce budget
Divorce doesn’t only take an emotional toll — it can take a financial one, too. Now that you will no longer be able to rely on having two incomes to make ends meet, you will need to come up with a budget. An effective post-divorce budget should focus on your essential expenses, including rent or mortgage payments, groceries, utilities, car payments, and any other necessary expenditures. You should look at how much money is coming in versus going out and take control of any unnecessary spending.
2. Monitor your credit report closely
Although changing your marital status will not directly impact your credit score, it’s a good idea to monitor your credit report to ensure it is correct. For instance, you should verify that information which should have been removed was taken off the report, such as a credit card that you no longer have authorization to use. You should also confirm that any joint accounts are now solely in your name and information was not updated erroneously.
3. Review your savings strategy
Following divorce, it may take some time to build your savings account back up. In addition to creating an emergency reserve with three to six months of expenses, it’s crucial to allocate funds each month toward your retirement account. Make a plan for a long-term savings strategy that takes your financial and personal goals into consideration.
4. Cancel joint accounts and open new ones
Failing to cancel joint accounts can result in you remaining liable if your ex-spouse runs up a large amount of credit card charges or overdrafts a bank account. If there is a balance on the account that cannot be immediately paid off, you should instruct the credit card company that you wish to suspend the account. You will need to open new bank accounts and new credit cards after divorce to replace those which were jointly held with your spouse.
5. Change your account passwords
During and after your divorce, you should change any passwords on your accounts. Even if you had separate accounts during the marriage, you may have shared the credentials with your spouse. Or in some cases, a spouse may have obtained account login information dishonestly. Make sure to update your email, bank account, social media, shopping, and credit account passwords, as well as the credentials for any other online locations where your financial information is stored.
6. Review auto-renewals and automatic debits
You should review any recurring or automatic debits to make sure you’re not going to be paying for services that are not your responsibility any longer. Whether you or your former spouse will be obligated to make these payments in the future, it’s essential to make sure they are in the correct name — and payment information is updated.
7. Change your beneficiary designations
Review any accounts where you have listed a beneficiary, such as life insurance, retirement, and brokerage accounts. If you made your former spouse as a beneficiary, you would probably want to change the designation to your children or another family member. You should also consult with a trusts and estates attorney if you need to make any changes to your will or other estate planning documents.
8. Purchase a safe and shredder
After you’ve closed your accounts, it’s vital to safeguard your financial information. By shredding sensitive documents and credit cards that you no longer need, you can help to protect yourself from identity theft. If you do not have a safe, you should consider purchasing one to store your valuables and financial documents.
9. Do a new tax projection
After divorce, your tax-filing status may change which could also change your tax rate. You should work with your accountant to run a post-divorce tax projection based on your income and deductions. Based on the new projection, you might need to modify your withholding amount and make changes to any investments.
10. Build a trusted financial team
If you’re wondering how to survive financially after divorce, one of the first things you should do as you are going through the process is build a trusted team of advisors who can assist you with reaching your goals. This may be particularly important if you weren’t the spouse who had the relationship with financial professionals during your marriage. Your team may include a financial planner, a CPA, and others who can help you achieve your financial objectives.
Contact an Experienced Kansas City Divorce Attorney
Divorce can be tough — emotionally and financially. It’s best to have an experienced divorce attorney on your side who can help you move forward. Divorce and family law attorney Mark A. Wortman provides representation to clients in the greater Kansas City, Missouri area who are facing divorce and strives to ensure successful results in their cases. To schedule a confidential consultation to learn how he can assist you, please contact him today online or by calling (816) 523-6100.
