September 8, 2010
The Single Life: Getting Your Finances in Order After Divorce
Divorce can be a drain on not only your emotions, but your finances as well. Whether it’s the housewife who had very little to do with paying bills or the husband who now has to pay support to a former wife and kids, a split from a spouse can mean major lifestyle changes.
Stacey F. Tisdale, money expertÂ and author of The True Cost of Happiness:Â The Real Story Behind Managing Your Money ($25.95; John Wiley & Sons) offers these tips to get your financial house in order after becoming newly single:
- Be sure you’re single. If you have your name on shared accounts, get them adjusted. Contact your financial institutions, such as your bank and credit card companies, about separating the accounts or getting single accounts. You and your spouse are going to have to get on same page with this, Tisdale says. A divorce lawyer or financial adviser should be able to help guide you in this process.
- Identify your ex’s money role and prepare yourself to assume it. For example, if your now ex was the breadwinner and sole provider, you will now have to make arrangements to become the sole provider for yourself and your household.
- Be aware of how your financial situation is changing. Is there a settlement that you are paying or receiving that will change your monthly income? Are you paying additional money in child support or alimony? Determine how these changes affect your bottom line and adjust your budget accordingly.
- Go back to the basics of budgeting. Connect with your values and what’s important to you when it comes to your spending. Create a spending plan based on your money coming in, your priority expenses, and track how you’ve been spending your money.
- Ask yourself the following questions when examining your spending:
- Can I afford this?
- Is it in line with my goals?
- If not, why am I doing it?
- Change your beneficiary for your will, trust, and other estate documents if it was a spouse. “Many people forget this once they become newly single,â€ Tisdale says. “Probably the last thing you’d want is for your ex to get everything you’ve saved for the future.â€
- Look into your health insurance coverage options. If you have coverage available through your job, utilize it. Under COBRA, you’re guaranteed 18 months of health coverage. Research on the Internet on how your coverage is affected as a now single person.
- Get a copy of your credit report. Even while the divorce is finalizing, get a copy to make sure there are no inaccuracies.
- Make sure that child support and education contributions are planned. Be sure you and your ex have a plan for how things will be paid for. That should be part of your divorce settlementAlways remember: You’re divorcing your spouse, not your children. Separate your financial lives, with the exception of children, says Tisdale, who is a proponent of joint financial responsibility for covering childcare expenses.