Creating Financial Resolutions Post-Divorce

How Does Divorce Affect Your Individual Finances?

Divorce invariably impacts individual finances, often leading to a significant reevaluation of one's financial situation. It typically involves the division of shared assets, potential alimony or child support payments, and the need to sustain a household on a single income. This financial reshuffling can lead to short-term instability and necessitates long-term financial planning to ensure stability. With the new year upon us, it's an opportune time to establish financial resolutions that not only accommodate these changes but also construct a sound and secure financial future post-divorce.

The Importance of Financial Planning Post-Divorce

Financial stability after separation is the foundation for a fulfilling and independent life. It provides the security and assurance needed to meet daily living expenses, secure future needs, and accomplish long-term goals.

A well-thought-out financial plan can act as a roadmap to achieve this stability. It is a comprehensive evaluation of an individual's current and future financial state, using known variables to predict future cash flows, asset values, and withdrawal plans. A financial plan adjusts as life changes and serves as a guide to keep you on track.

A post-divorce financial plan may include:

• Budgeting and Expense Tracking: Understanding income and tracking expenses is key to managing post-divorce finances.
• Debt Management: Creating a plan to responsibly manage and pay off any debt.
• Asset Division & Management: This includes assets acquired during the marriage and how they will be divided or managed post-divorce.
• Retirement Planning: Adapting your retirement plans to reflect changes in financial circumstances post-divorce.
• Insurance Needs: Evaluating and making changes to life, health, home, and auto insurance policies post-divorce.
• Emergency Fund: Establishing a financial safety net for unforeseen circumstances.
• Estate Planning: Revising wills, trusts, and powers of attorney in the light of the new financial and familial situation.

Financial Resolutions for New Beginnings

As you embark on this new phase of life, it's crucial to set and pursue clear financial goals that will help shape your financial future. However, it’s important to note that you do not have to tackle everything at once.

Here are five financial goals to consider when developing new year’s resolutions post-divorce:

1. Make Financial Independence a Priority: Strive to create a stable financial base that doesn't rely on alimony or child support. This might involve exploring new employment opportunities, furthering your education to improve job prospects, or developing a side income.
2. Plan for Retirement: Though retirement may seem far off, it's essential to make it a priority. Adjust your retirement plans to account for your changed circumstances and start contributing as much as you can as early as possible.
3. Get Your Individual Financial Documents in Order: Ensure all your financial documents, including bank statements, tax returns, insurance policies, and investment records, are accurate and up-to-date. This also involves updating your will and any beneficiary designations.
4. Build an Emergency Fund: Set aside money in an emergency fund to cover at least six months of living expenses. This fund will provide a safety net for unexpected expenses or income loss.
5. Reduce Debt: Make a plan to reduce your debt as much as possible. Consolidating your loans, paying more than the minimum payment each month, and focusing on high-interest debt first can help accomplish this.

Support Throughout Your Divorce Proceedings

An experienced family law attorney can be invaluable in navigating the tumultuous waters of divorce. McKinley Irvin family law attorneys can provide guidance to help you make informed decisions that will safeguard your financial future. Our firm understands the legal intricacies involved and aims to protect your interests, ensure a fair and equitable division of assets, and advocate for your rights in issues such as spousal support and property division. Contact us for more information.