Any major event in your life can result in financial changes that you need to work on. When it comes to dealing with divorce, you’re not only dealing with emotional stress, but your finances may experience some fluctuations as well.
Divorce won’t only take a toll on your expendable income; it can also affect your credit and assets. With that being said, you need to ensure you’re making the right steps to get on track with your finances and improve your financial health.
For this reason, it’s recommended that you work with a fee-only certified financial planner to help you navigate these complex waters. With their help, you’ll get a financial plan best suited for your lifestyle and goals, allowing you to feel financially empowered and independent.
Tips on How to Improve Your Finances After a Divorce
Tip #1: Reevaluate Your Financial Situation
As mentioned earlier, your finances will go through dramatic changes when you go through a divorce. So if you want to improve your finances, you need to step back and reevaluate your financial situation with a financial planner.
When you’re reevaluating your finances, you mustn’t miss checking your credit report. This is because your credit score will help determine how much work you need to do to help you recover financially. And although your divorce has impacted your credit score, having the right plan can help you build your credit much easier.
Tip #2: Have a Strong and Flexible Budget
After finalizing your divorce, what you need to do next is to set a budget. This is because you’ve managed to get through several years with a two-income household, and now, a single-income household is a huge shift. Setting a budget will help ensure that they get to live a comfortable life, even with this drastic financial change.
You can start by listing all your expenses — from utilities down to your mortgages and child support — and include your sources of income. Once you’ve listed everything down, find how much you need each month to live comfortably.
Again, a financial planner can help you with this. They won’t only look at your current financial situation, but they’ll also look beyond the timeline, ensuring you have a budget that works for you.
Tip #3: Move Your Assets To Your Name
Determining your assets is a crucial part of the divorce process. So once you’ve figured out what belongs to you, it’s time to move these assets to your name.
Joint purchases can be quite tricky, but thankfully, the court can help iron out these complexities. But once you’ve determined what is rightfully yours, it’s best to move them to your name right away as it can impact your net worth, which could affect how you can receive financial aid in the future.
Tip #4: Build Your Emergency Fund
Ideally, you’d want to have an emergency fund even when you and your partner aren’t separated. But after you’ve gone through a divorce, it’s best to rebuild your fund and ensure it fits the new lifestyle you’re living.
Opening a new bank account and closing a joint account can help and could be a much more convenient way to build your emergency fund. Remember that the amount you build should help you survive three to six months of no income to ensure your security.
The Bottom Line: Working with a Financial Advisor Can Help You Feel Empowered About Your Finance Again
Divorce is no easy process, and you’ll definitely be stressed about different aspects of your life, including your finances. However, don’t feel disheartened since you can get back on track and feel empowered again.
By speaking to a financial advisor, they’ll create a financial plan that fits your current situation and help you reach your financial goals in the new chapter of your life. So if you’re ready to bounce back and take control of your money, this is your sign to follow through!
How Can We Help You?
Dealing with finances can get pretty overwhelming. Because of this, it only makes sense to seek professional assistance to help you stay on track.
Here at Calamita Wealth Management, we help individuals plan for their retirement. We understand that each client’s financial journey is different — they could be going through a divorce or even lost a job. Because of this, we create financial plans made just for them.
If you’re looking for a financial advisor in Charlotte, reach out to us today!