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Divorce and Finances

Your financial life after divorce

When you're getting a divorce, you may not immediately be thinking about its impact on your financial future. But planning ahead can make this part of a very difficult situation a little easier.

Divorce is a regrettable fact in today's society. The gravity of the decision to end a marriage distracts many people from foreseeing the financial fallout that will impact their lives for years. Life after divorce not only means loss of social status and the comfort of being part of a couple but the reality that earning power will be reduced, expenses will increase and many financial benefits of marriage will be eliminated can be overwhelming.

Below are some sobering considerations regarding the financial consequences of divorce:

  • Most people will need an increase in income to maintain their standard of living after divorce
  • Some women have fallen into poverty due to loss of income and the cost of single parenting
  • Full child support benefits can be difficult to obtain

Start thinking about your financial plan for recovery before you file for divorce

Get the facts so you know where you stand. First, hire an experienced family and divorce attorney. Look for a professional who leans toward a peaceful settlement but will also fight for you when necessary. A volatile, drawn out divorce is detrimental to everyone emotionally and high legal fees will drain the financial resources you need to rebuild your life.

Compile proof of your income and write out a budget reflecting your income and expenses after divorce. This can be disheartening, but it will help you make informed decisions about whether to stay or move out, take on a second job, how to manage child care and more. Begin to establish credit in your own name and close all joint credit accounts right away to prevent “revenge” spending.

Stay on track with your financial plan for recovery after the divorce is final

After divorce, one of your top priorities should be to get back on schedule with retirement savings. Try not to delay more than a few months, even though your income has diminished. Don't forget to reevaluate your investments and develop a diversification strategy based on your individual portfolio.

Often one spouse carries the bulk of the debt which means they may also establish a better credit rating. Avoid taking on new debt. If your credit is shaky or was marred by the divorce, consider rebuilding it through a secured credit card or starter loan from a credit union. If necessary, find alternative credit references such as your landlord reporting consistent rent payments, to reestablish your good standing.

Update your estate plan and assets. It might be time to change beneficiaries on your 401k, IRA, life insurance policies, and to update your will and powers of attorney. Ask your attorney to walk you through the details. Be sure assets you acquired through the divorce such as vehicles, homes and property and all bank accounts are titled in your name only.

Overall, your greatest leverage for financial recovery after divorce is good information and a clear head. Survive the divorce rollercoaster by taking excellent care of your physical and emotional well-being. Finally, protect your children by making their care and well-being the overarching priority guiding the choices of both you and your ex-spouse throughout this difficult transition and in years to come.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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