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How To Put Your Finances Back In Order After a Divorce

I don't know anyone that comes out of a divorce in better financial shape than when they went into it but there are steps you can take post-divorce to get your financial affairs back in order. Here are the basics:

  1. Make a budget and stick to it. You are no longer sharing expenses with your spouse so now you are solely responsible for the mortgage, utilities, food, taxes and insurance. You may have not paid attention before but it's time to pay attention now and the best way to do that is to make a budget. A budget will tell you what expenses you can cut, where you need to watch your spending, and where you can move your money in order to be a financial success in the future. For example, maybe you turn off the cable because your spouse was the only one who watched tv anyway and you take that extra money and contribute more to your retirement.
  2. Life, health and disability insurance. If you have minor children who are dependent on your income then you need both life and disability insurance. This type of insurance may be available for free as an employee benefit or it may be something that you need to research and see where you can purchase it for the best value. With respect to health insurance never discount looking into the COBRA cost of health insurance through your former spouse's policy. Always shop around.
  3. Beneficiary designations. If you don't want your former spouse to collect your life insurance and/or retirement then you need to change the beneficiary designations on all life insurance, retirement, investment and bank accounts. Do this sooner rather than later to be sure those that you love actually receive the money you intended for them to receive upon your death.
  4. Long term care insurance. If you are close to 50 or older then you need to start considering long-term care insurance. This insurance pays for assisted living and/or nursing home care should you need it.
  5. Taxes. You will likely be filing single or head of household now. Tax filing status is determined as of December 31 of each year. This means you need to change your withholdings at work which is something I advise clients to do early in the divorce proceedings if they will be divorced by year end. This is also a good time to find a new accountant. Oftentimes accountants have a closer relationship with one spouse over the other. If you are the spouse that wasn't as close to the accountant then this is the time to start fresh with your own, new accountant.

For more tips with respect to getting into good financial shape post-divorce talk to a good divorce attorney at columbiafamilylawgroup.com.