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Rebuilding your finances following divorce

On Behalf of | Jul 5, 2024 | Divorce |

Divorce significantly impacts your life and finances. It is important to manage your money carefully as you start this new phase of your life. The end of a marriage often brings financial challenges, from dividing assets to adjusting to a single income. Taking control of your finances after divorce can help you build a stable and secure future for yourself.

Here are some essential steps you may consider to secure your financial future post-divorce:

Reassess your financial situation

The first step in your financial journey after divorce is reassessing your current situation. Sum up your current assets, debts and income. Then, create a detailed list of all your financial accounts, including savings, investments and retirement funds. You should also update your budget to reflect your new marital status. This step will help you better understand your financial standing and plan accordingly.

It is also important to review your credit report to ensure accuracy. If you shared accounts with your ex-spouse, consider closing them and opening new ones in your name. This step not only helps you establish financial independence but can also protect your credit score.

Secure your financial future

Once you have assessed your current situation, you might consider planning for your future.

You could start by updating your estate plan, including your will, trusts and beneficiary designations. Unless your divorce agreement requires it, you might want to remove your ex-spouse from these documents.

Next, you may want to focus on building your retirement savings. If you received a portion of your ex-spouse’s retirement account in the divorce settlement, you could consider rolling it into an IRA to maintain its tax-deferred status. If you’re starting from scratch, maximizing your contributions to employer-sponsored retirement plans and IRAs might be beneficial.

It is also worth remembering the importance of insurance. After your divorce, you might want to review your health, life and disability insurance policies. Obtaining new coverage could be necessary if you were previously on your ex-spouse’s plan.

Lastly, you might find it helpful to work with an experienced attorney. They could provide valuable guidance tailored to your specific situation and assist you in making informed decisions about your financial future.

Rebuilding your finances after a divorce takes time and patience. Strategic planning and laying the groundwork for a secure financial future are important.