The end of a marriage can throw your whole life off-kilter. In addition to the emotional turmoil and lifestyle changes that accompany a divorce, you’ll have to learn how to manage your finances as a single person. This can be especially difficult for people who married young or who relied on their spouses to handle most of the major financial decisions.
Post-divorce financial planning doesn’t have to be as daunting as it seems. The trick is to start small and be thoughtful before making any big decisions. Over time, you will be able to develop goals and techniques that fit your unique needs.
Most financial experts suggest that newly-divorced individuals start with the following strategies:
- Educate yourself: Don’t rely on hired professionals to do all your financial planning. To a certain extent, you may be throwing good money after bad. Instead, make an effort to learn about ways to reduce your debt, grow your wealth and plan for retirement. A good place to start is by taking classes through your local community education department or a nearby community college.
- Update your estate plan: After your divorce is complete, you’ll likely want to redo your will so that it reflects your new family structure. Then, be sure to update your beneficiaries for financial accounts like insurance policies and retirement plans.
- Change your withholdings: Your state and federal income tax liabilities will most likely change post-divorce. Talk to your human resources department at work to file a new W-4 form. If you have a pension plan, you may also need to file a form W-4P.
- Collect your records: It will be helpful in the long-term of to have copies of the financial records you shared with your spouse. It may be easier to get a hold of these records while the divorce is fresh. If your spouse doesn’t have them, or won’t share them, you can get old copies of tax returns directly from the IRS.
By focusing on these steps, you can be on the road to financial wellness in your new single life sooner than you might think.
Source: Forbes, “Some Tax And Financial Tips For The Divorced From Julian Bock,” Peter J. Reilly, May 22, 2102.