By: Josh Slocum, McClellan Wealth Management
The divorce process can be lengthy, with some proceedings lasting a year or longer. Once the settlement is reached, you may be emotionally and physically drained.
However, in order to pursue your financial future, there are a few things you may want to consider doing right away.
3 Steps Every Divorcee Should Consider Taking
Step #1: Close Joint Accounts and Open a New, Individual Account
You might have closed your joint accounts in the preparation phase of your divorce. If not, now is the time to do so. Emotions can be high and tension thick, so it’s best to close the account before someone does something they regret.
This isn’t limited to only checking accounts, but credit cards. Call the credit card company and suspend the account if your cards still have a balance. This will prevent any future charges, and you’ll still be able to pay off the balance. Confirm with the provider that the suspension cannot be lifted or the account reopened.
Keep in mind: If you don’t have a huge emergency cash reserve, opening a credit card may be worth considering before closing your account. You don’t want to be caught in a situation where you can’t pay your bills for a long time.
Step #2: Create a New Financial Plan and Budget
Your income will most likely be changing after your divorce. If you don’t already have a financial planner, you may want to consider finding a good one in your area.
But before you can create a new financial plan, I recommend you start the process by compiling a list of your monthly expenses, like rent, groceries, utilities, car payments, insurance, and a list of your income streams. Depending on your situation, you may now have to buy health insurance, which can be a huge monthly expense.
You’ll also most likely have new savings goals for retirement or your children’s college funds. Knowing the income and expenses stream will help determine how much you can set aside each month.
Step #3: Re-Organize Your Home
It probably comes as no surprise that you’ll want to re-organize several areas of your life after divorce. You may not think about these items, but things like a new paper shredder are important. You’ll have some documents you’ll want to dispose of, so a good shredder can help protect your identity.
Additionally, you may want to consider:
- Stripping your computer of valuable information. It may be a good idea to change important passwords as well. Changing things like your Apple ID is also a good idea.
- Buying a new safe for your home. You’ll definitely want a place to store important documents and assets like jewelry and other valuables.
- Set up a new filing system. With all the new accounts, it’s the perfect time to create a new organizational system. You’ll have a lot of documents you’ll need to access quickly as you may change your name, enroll your children in a new school or get a new passport, for example. If the paperwork is well-organized, you’ll be able to locate these items quickly.
The Process of Financial Planning After Divorce
Should you need us, McClellan Wealth Management is here to help you through all the financial aspects of the divorce process. We understand that this time is stressful and difficult, to say the least, and simply having a financial planner as a partner through this journey may be able to take just a bit of stress off your shoulders.
Contact us today at 205.208.9868. We’d be happy to help guide you through this difficult time.
This material is provided as a courtesy and for educational purposes only and is not intended to be relied upon as specific investment advice and is not a recommendation, offer or solicitation to buy or sell any security. Investing involves risk including loss of principal. Before investing or using any strategy, individuals should consult with their tax, legal, or financial advisor. The opinions expressed here are those of the author and not Advisor Services Network, LLC.