How to Build Financial Stability After a Divorce
Getting a divorce can be expensive. In fact, a contested divorce can cost up to $30,000 in attorney fees and court costs. This doesn’t include costs associated with relocation, separate household expenses and taxes.
With the rising cost of divorce, it’s no wonder that only 25 percent of divorcees feel financially secure after a divorce. The unfortunate reality is many people struggle after a divorce – financially and emotionally.
If you are coping with the aftermath of a recent divorce or separation, you might be wondering how you’ll recover financially. This is especially true if you aren’t accustomed to managing your finances or earning money.
The good news is money management is a skill that you can learn. Although it may take some time, you can build financial stability after a divorce. Here’s how.
Take stock of your assets
The first step is to assess what you have left after the divorce. This includes real estate, heirloom jewelry, bank accounts, stocks and any other financial assets.
This step shouldn’t be overlooked or underestimated. It will provide you with a realistic look at the assets that you have that can support your current lifestyle.
If you are accustomed to living in a household with two salaries, your current financial situation will require you to make a few adjustments. Unless you are wealthy, your standard of living will change.
Sell assets that you can’t maintain
In many instances, the family home is the most expensive property that a couple owns. It’s understandable if you have a strong desire to keep it.
What happens if you can’t afford the home? Should you keep it and struggle? Of course not. When it comes to evaluating your real estate holdings, you should make a decision that increases your chances of financial stability.
You may decide that it’s in your best interest to sell the home and downsize to a smaller home or apartment. There’s no use of holding on to a property that isn’t affordable for you. The good news is it’s only a house. Once your finances improve, you can purchase another home in a few years.
You can also leverage the equity built up in your vehicle to get a loan even if you have poor credit. Platinum Lending offers a free title loan estimator so you can get an idea of how much your fully paid vehicle title is worth.
Hire a financial advisor
After your divorce, you may be too emotional to be able to handle your finances objectively. You should hire a professional who can provide you with advice that will help you make sound decisions about your money.
A financial advisor can assist you during this difficult time. The best thing about hiring a financial advisor is you will get objective advice from a professional who has helped people in similar situations.
Resist the urge to take advice from well-meaning friends and family members. Although they want the best for you, they may not have the financial wisdom that you need at this moment.
Before you select a financial advisor, here are a few things that you should remember.
- Hire a Certified Financial Planner (CFP).
- Ask about the pay structure and fees.
- Get a sample copy of a financial plan that was prepared by the planner.
When it comes to your finances, don’t leave your financial stability to chance. Hire a professional to help you create a strategy for your money.
Take a look at your budget and adjust it
Many people realize their financial situation won’t be the same after a divorce. However, they don’t make the proper adjustments.
When you have additional financial support, it’s easy to spend your money in a carefree manner. After all, you have another person to help you out if you get into a financial bind.
Unless your goal is to live in financial chaos, you must make the necessary adjustments to your budget. When it comes to budgeting, here are some things that you should consider.
- Housing (25 to 35 percent)
- Utilities (5 to 10 percent)
- Food (10 to 15 percent)
- Transportation (10 to 15 percent)
- Personal (10 to 15 percent)
- Recreation (5 to 10 percent)
Budgeting your expenses may not be fun, but it’s worth the effort. By making a few sacrifices now, you can work toward financial stability
Increase your savings
In many ways, you will be starting over. When it comes to saving and spending, you may have to develop new habits
If you aren’t used to saving money, you should start immediately. Having a hefty savings account can keep you out of credit card debt and reduce the stress of being on your own.
According to a recent study by TD Ameritrade, only half of divorcees have active savings and investment accounts. This indicates that the majority of people in this group will have to rely on credit, friends or family members to get them out of a financial bind because they haven’t established emergency funds.
Your financial stability doesn’t have to diminish because of a divorce. By applying these tips, you can build financial stability after a divorce.