Getting a divorce will impact your finances. Along with the loss of your spouse’s income, you could lose your retirement benefits, moral support, and the safety net that may exist with having a marital partner. On the other hand, perhaps your spouse was not good with managing money and you are now able to save. Whatever the case may be, the following basic steps below will help you regain control over your financial future.
- Rethink your retirement planning: After a divorce, money can be tight. Both spouse’s monthly budgets will usually increase as one household is divided into two. Given financial constraints, recent divorcees frequently elect to forego saving for retirement. Some will even dip into their retirement savings. Both of these can be a costly mistake if a plan is not in place. You should reassess your budget during and following a divorce so that you can make the necessary adjustments to allow yourself to continue setting money aside for retirement. While a momentary pause on short term investments is reasonable given that you are going through a divorce, you should attempt to resume saving and investing as soon as possible. Further, following a divorce, it is an ideal time to reassess your investments. Spouses often diversify their assets between themselves, with one spouse for instance investing in a Roth IRA and the other a 401(k). Now that you are in charge of all investing, you need to adjust your portfolio to ensure enough diversity.
- Rebuild your credit: Sometimes, one partner in the marriage will end up doing the bulk of the borrowing. This could be due to one spouse’s better credit or simple division of tasks, with one spouse taking on the monetary matters, including applying for credit. However it occurred, the spouse with a weak credit score following a divorce will have to rebuild it to allow for housing and other opportunities. Be careful to proceed with caution and not take on new debt following a divorce. A secured credit card is a good way to start rebuilding your credit history. You can also ask your landlord to report timely rent payments to the credit bureaus. This can help build a positive credit history that is not linked to your former spouse.
- Update your estate planning: Your estate plan will change drastically after a divorce. You may already have a trust or will naming your beneficiaries, executor, and choice of guardian for your minor children. Chances are, however, the designation of these important positions will change following a divorce. It is critical that you update your will and any trust, power of attorney, health care proxy, or other estate planning documents as soon as possible after a divorce.
- Review your insurance policies: While you are updating your estate plan, it is also important to review your insurance policies to ensure they cover the people and things you desire. Check to make sure you are not paying for health, disability, or life insurance for your former spouse unless this is something you agreed to or were ordered to do.
- Take charge of your financial decisions: In a marriage, financial decisions are often driven by the needs of the partnership or family. Sometimes, one partner is more in control of finances than the other. Now that you are flying solo, take complete charge of your financial decisions. Develop the skills and knowledge necessary to manage your finances effectively.
If you are interested in learning more about your legal options regarding your Florida divorce, contact the experienced family law attorneys at the Law Offices of James S. Cunha, P.A. We serve family law clients throughout West Palm Beach, Boca Raton, Wellington, Jupiter, Palm Beach County, Broward County, and Martin County areas. Contact us today at (561) 429-3924 or via email at [email protected].