Divorce is a messy life situation that can catch you by surprise and interfere with your financial standing. Whether divorce happens abruptly or gradually over time, one thing is sure: a lot of things in your life are about to change. To keep up with changes, you need to protect yourself and your future—and keeping your finances in order is one decisive way to do so. Here are a few steps that you can use as a roadmap to handle your finances after divorce.
Adjust Your Budget – Divorce comes with a lot of economic changes and costs. From dealing with tax burdens of selling assets to catering to attorney’s fees, you’ll need to deal with short-term financial expenses that can easily strain your budget. You need to start thinking about ways of trimming your costs because you only have your income to draw on. Make budgetary changes like saving on attorney’s fees, downsizing your home, eating at home, and scaling down your children’s extracurricular activities.
Create an Emergency Fund – It can be a challenge to anticipate what may happen after a divorce. But one thing that’s guaranteed is that you’ll no longer rely on your spouse’s income. Create an emergency saving account to help you sort out something sudden like job loss or expensive car repair.
Update Your Tax Withholding – Your tax situation will change after divorce because you won’t file as married anymore. You may need to file as head-of-household or single depending on whether you can claim your children as dependents or not. Either way, you need to update the amount of money that your employer is deducting from your paycheck so that you don’t have more money being deducted from your check than should be.
Look For Ways To Earn More – Although divorce sucks for several reasons, it has its silver linings. For instance, now you have a lot of free time, which is a fantastic opportunity to boost your income. Look for ways to increase your income by picking a side gig or learning a new skill. The extra cash will not only help you become financially stable but also help you overcome the many money struggles that the divorce process is causing you.
Seek Help From A Financial Advisor – Now that your financial situation has changed, it is time to update or create a new financial plan. Remember that your financial plan is going to be different from the one you had before your divorce, so it is best to understand the aspects to include or eliminate. An experienced financial advisor can guide you through the steps you need to take. Consider hiring one, particularly if you have children or complex assets.
Divorce can be devastating and is undoubtedly an end to an important phase in your life. However, it is possible to get through it with a lot of things intact, including your finances. Educating yourself and implementing the above-highlighted tips can reduce the financial impact on your current and future life.