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One way or another, financial issues are almost always intertwined with divorce. Financial difficulty is one of the most often-cited causes of divorce. But financial planning is even more critical in the aftermath of a marital breakup. Here are some concrete steps you can take to improve your chances of financial stability after divorce.
- Take a close look at your budget—Whether you had one during your marriage or not, it is essential that you put together a realistic and achievable budget, one that is consistent with your post-marriage lifestyle. Determine your monthly income, adjusted for child support or alimony and then calculate and prioritize your expenses. Housing, food, utilities and transportation should be at the top of your list.
- Plan for your children’s future—Whether it is college, private school, marriage or a down payment on their first house, your children will have needs and you’ll want to be able to help them. Have you and your ex put together a plan to pay for your children’s tuition? If not, have the discussion. You might consider jointly funding an account to be used to defray future expenses.
- Revisit your retirement planning—Sit down with a qualified advisor and determine what your goals should be, whether they need to change, and where you stand on meeting them. Make certain that you get your fair share of any retirement contributions made during the marriage, but understand that, moving forward, you are solely responsible for funding your retirement. Be willing to make a few sacrifices now in an effort to live more comfortably in your golden years.
- Understand the tax implications of being single—There are myriad potential tax consequences of a divorce. First and foremost, be sure that you file correctly, based on when your divorced is final. There are other issues to consider as well–you may be in a different tax bracket, there may be tax implications related to your investment portfolio or you may need to determine the tax treatment of child or spousal support. Contact an experienced tax advisor to protect your interests.
- Do not take unnecessary risk—Insurance is an essential component of a solid financial plan. After a divorce, meet with your insurance agent to review all your coverages—automobile, home, casualty, disability and health insurance. Be clear about how health insurance will be provided for any minor children.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal. Please consult with your tax advisor before investing.
Contact The Pinnacle Financial Group
At The Pinnacle Financial Group, we have provided professional risk management advice to individuals and businesses in New York and Connecticut for two decades. We understand the critical role insurance planning plays in your financial future. We will carefully explain your options and the different strategies available to you, so that you can make the right decisions for you and your loved ones.
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