Divorce is nothing if not emotionally difficult, but divorce is also often a major financial hurdle that can be extremely difficult to recover from. When you compound this with the fact that many divorces are predicated on finances, it highlights exactly how financially difficult divorce can be. There are, however, things you can do to help you stay on top of your finances and recover financially post-divorce.
Create a Spending Plan
The first step in conquering any financial setbacks is to create a spending plan that balances your income against your expenses. This involves calculating your total income, including:
- Your income from employment
- Your income from child support (as applicable)
- Your income from spousal maintenance (as applicable)
Once you have established your monthly income, calculate your monthly expenses. After your divorce, you are likely to have expenses you may not have considered before, so it is important to track them closely. Now is the time to consider where you can cut expenses and ensure that you stay within your spending plan.
Update Your Beneficiaries
While you were married, your spouse was probably the beneficiary of your life insurance policies and your retirement accounts. Once you are divorced, however, you will likely want to change this status, and it is something you should not lose sight of. Until you remove your ex's name, he or she will remain on those financial tools. Even if your divorce decree says that your spouse has waived the right to the benefits therein, you need to formally remove him or her from the form with each financial institution, or the benefits will be paid as listed. Further, check to ensure that your spouse follows through with any directives he or she is meant to comply with. Just because your spouse, for example, is required to keep you on his or her life insurance policy does not mean that he or she is actually following through with that.
Update Your Will
Since you are already updating forms, it is a good time to revise your will. Carefully go over the legal ramifications of the changes you are effecting, and make sure they comport with your settlement agreement or divorce decree.
Have an Emergency Plan
When you are part of a married couple, you have each other to fall back on in a financial emergency – if one of you loses your job, for example. When you are divorced, you will need to face financial emergencies on your own. This makes having a financial emergency plan imperative. Your plan can be as simple as putting away a portion of your income each month – or whatever works for you.