If you are finally wrapping up your divorce, you probably feel financially and emotionally exhausted, even if the process wasn’t acrimonious. It takes a lot of work to untangle your assets (and your heart) from another, especially if you were married for a long time. Now, you are facing a life that might look very different than what you imagined as well as a new financial landscape. Even though you probably want to wish all divorce-related thoughts and requirements away, you aren’t done yet! As a newly single woman, you need to get a clear view of your current finances and make sure your estate plan, your insurance policies, etc… are all up to date. Here is a short list of the financial areas you need to review and update once your divorce is complete.
Your Monthly Budget
Your financial state may be very different now, especially if your husband or partner was the primary breadwinner. Even if you both earned paychecks, it will still be difficult to transition from two salaries into one.
Now is the time to calculate your primary monthly expenses and see how they compare with your income. You may be unpleasantly surprised at how hard it is to pay a mortgage on your own or how much groceries and gas you still need to buy even as a single. (Wondering if you should keep your home after divorce?) Don’t turn away from this information. You have to embrace your new reality and create a budget that you can make work. Many women get themselves into trouble after their divorce, because they continue living up to the standards they got used to when they were married. Not every woman can afford to do this. Budget smart, and don’t spend more than you earn. If you need help learning how to be a savvy shopper, check out our savings and investing section.
Your Retirement Plan
First, your vision for your retirement will look different now that you are a single. Start re-imagining your retirement and figure out what you really want to do and how you want to live during your retirement years. Now, look at your retirement fund. Are you on track to meet your goals? How are your assets allocated? Sometimes, one spouse focuses on riskier assets while the other invests in safer assets to balance their shared funds. Now that you are on your own, it might be time to reallocate. You’ll also want to learn about what you can expect from Social Security after divorce.
Divorces are expensive, and you may be tempted to dip into your retirement fund to help cover some of the costs. Resist! That money is for your future. If you can, let it grow and find another way to cover your costs.
Update Your Estate Plan
Sit down with an estate planning attorney and start updating these documents. After a divorce, your estate will look very different. Also, you may need to update your beneficiaries, the executor of your will, and the guardian you have in place for your children. It is likely that you’ll also want to update your trust, living will, powers of attorney, and your health care proxy if that person was your ex-spouse.
Update Your Insurance Policies
Review your current insurance policies. You may need to cancel policies for your vehicle, home, and other assets if you no longer own them. You also want to make sure you aren’t paying premiums for health, life, or disability insurance policies that cover your ex-spouse. Additionally, you will likely want to change your beneficiary on any policies if the beneficiary was your ex-spouse. This might be a good time to call up your insurance broker and check see if you can get better deals on your insurance or to see if now is a good time to consider additional insurance products. (Learn more about maintaining your health insurance after divorce.)
Reviewing your financial situation after a divorce might be hard (or depressing), but it’s a first step toward rebuilding a strong and financially stable life for yourself. Be smart and confident as you embrace your new life! Learn even more about protecting your finances during divorce by reading our divorce article archive just for women.
Nadia Shokohi MD, PhD. CDFA is a former physician who made an unconventional career change to the financial services industry more than 10 years ago after her own divorce. With her own personal experiences and special expertise Nadia’s mission is to provide women with the knowledge and tools they need to face the financial issues that come with big life transitions such as divorce, widowhood, and retirement. She also brings invaluable skills to provide doctors with the best advice and service available because she understands the unique challenges that only physicians face.