Divorce has a high emotional impact on you. Your awareness of your financial position is extremely important at this cross road of your life. You want to be able to move forward with a solid footing for your financial future.
Assess Your Current Situation: Get a grip on your finances and figure out where you stand. You have less household income and perhaps have additional expenses that will not be shared any longer. Your lifestyle is likely to change. Be PROACTIVE here.
Budget/Spending Plan: Determine what your income is including: salary and wages, interest, dividends, any alimony or maintenance, child support. As for expenses, some are fixed like your mortgage or rent, food and transportation. Some others are more discretionary like movies, trips, wine tastings, etc. The discretionary expenses are the ones where you might have to make adjustments until you get use to your new “normal”.
Prioritize You Goals: Your goals are likely different now than while married. List the things that you want to accomplish such as retirement savings, educational goals for you and/or your children. Prioritize based on what YOU need and want. These probably look different than being part of a married couple.
Control Debt: Avoid the temptation of credit cards! Plan on how to diminish and eliminate the debt that you have. Find out which debts have the higher interest rates and try to pay those first. Avoid having to pay late fees. Pay more than minimum balances whenever possible.
Protect Your Credit: Your credit history might take a hit through a divorce. Review your credit report and check for errors. Will your name change on accounts? Are there joint accounts that have been or should be closed? You can check your credit report annually at AnnualCreditReport.com. Begin your own credit record with timely bill payments and minimal credit inquiries.
Review Insurance: Often, insurance is dealt with in a divorce settlement. Make sure you have adequate insurance for health, life, disability and long term care. Review your homeowners and auto insurance coverages. Sometimes a change in marital status may cause a need for rewriting.
Change Your Beneficiaries: You may be required on some accounts or policies within the divorce settlement. For others, make sure you change power of attorney, trustee, and personal representative on any estate planning documents that you don’t still wish your ex-spouse to be named on. Consult with an attorney on all legal documents.
Tax Implications: Your income tax filing status, deductions and other items are most likely to be different for you now. You may have alimony or child support income which could impact your return. Your dependency exemptions could also change. Check with your tax professional to understand your new circumstances.
Consult a Financial Professional: A financial professional can help you focus on a plan personalized for you that addresses your goals and dreams, make suitable recommendations and help you observe and make adjustments to your plan.
This article is for informational purposes only and should not be construed as investment or financial advice related to your personal situation. Please consult your financial advisor prior to making financial decisions.
Eric Berner, CDFA is a Financial Advisor with Waddell & Reed, Inc. in Nashville, TN. Eric is securities licensed in AL, CA, KY, TN, and NE. He also holds Health, Life and Variable Insurance licenses in KY and TN. He can be reached at 615.399.0128 or via email at [email protected] Waddell & Reed, Inc. Member SIPC (03/14)
Child support in Tennessee is based on the Income Shares Model, and the provisions are outlined in the Tennessee child support guidelines. The court may require health insurance coverage for each child of the marriage, with either party to pay all, or each party to pay a pro rata share of, the health care costs not paid by insurance proceeds.
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