Start Off Your New Life on the Right Foot Financially

For many women recently divorced or considering divorce, untangling their lives from their spouse is not an easy task. If you’re lucky, you have a clear vision for your post-divorce finances.  But if your former spouse managed your finances, or if you split the responsibilities, you may feel unsure of where to begin. We sought advice from a Certified Financial Planner , Spencer Betts to learn how you can improve your financial savvy regardless of your financial literacy.

What are the first steps for rounding up your finances post divorce?

It is important to know where you stand currently. Creating a net worth statement (a list of your assets and debts) and making sure you have all relevant financial documents is essential when starting the planning process. Get copies of financial documents including a list all investment and banking statements, copies of your tax returns for at least the last 3 years, and any estate documents (Will, Trusts, Health Care Proxies). Don’t forget to change your name on all documents, update beneficiaries and close joint accounts.

In terms of taxes, it’s important to know who gets which deductions such as Children & Mortgage Interest, Charities, etc.

Another important area to examine is your cash flow. If you've never dealt with the bills, start with some basic understanding of cash flow — including debt management, how to handle mortgages and if you need to be refinanced to take an ex-spouse off the mortgage. How much do you spend on a monthly basis?

What are some of the concerns you see regarding investments?

The focus early on is making sure the investments are set up correctly to deal with the new reality. It’s important to update  beneficiaries, setting up new IRA if they are receiving QDRO (Qualified Domestic Relationship Order), making sure a QDRO was completed. Think about long-term planning for your investments and re-setting your retirement goals. Who will manage your investments going forward?  If you were married for at least 10 years, you may be entitled to social security benefits from your spouse.

When is it time to seek professional help from a financial planner?

The sooner you engage a planner the more help they can be in the process. Having another set of eyes to make sure you can handle the debt, cash flow and other new expenses before your divorce is complete can help make sure you start off your new life on the right foot financially.

There are many resources out there to help you begin to sort out the sometimes daunting task of managing your post divorce finances. The good news is — you’re not alone! You can access online resources like investopedia  and if you’re seeking personalized education and understanding of your current financial situation, there are professionals that can help.

Spencer Betts can be reached at Bickling financial services.