Tips and Strategies of How to Get Back on Your Feet Financially After a Divorce
Divorce is a challenging and life-changing event that affects every aspect of a person’s life, including their financial stability. Statistics show that those getting divorced need a more than 30% increase in income, to maintain the same standard of living they had prior to their divorce. (1) For New Yorkers navigating post-divorce finances, it’s crucial to develop a strategy that helps secure a stable financial future.
Let’s discuss some practical tips and strategies for preparing for a post-divorce financial makeover in New York.
Reassess Your Budget and Expenses
Reassessing your budget and expenses post-divorce is essential for financial stability. Begin by understanding your new income and expenses, and prioritize essential costs such as housing and utilities. Identify areas for cost-saving measures or adjustments, like reducing discretionary spending or finding more affordable alternatives. Finally, create a new budget tailored to your post-divorce situation, accounting for income, expenses, and financial goals. It’s important you regularly revisit and adjust your budget to maintain financial control.
Manage Debt and Credit Responsibly
Managing debt and credit responsibly after divorce is crucial. Start by reviewing and closing joint credit accounts to avoid potential liabilities. Establish credit in your name by opening a new account or securing a credit card. Prioritize paying off outstanding marital debts to improve your financial standing. Finally, monitor your credit report and score regularly to track your progress and ensure accuracy, making timely payments and addressing any discrepancies to maintain a healthy credit profile.
Update Financial Accounts and Beneficiaries
Updating financial accounts and beneficiaries post-divorce is vital for protecting your assets. Begin by separating joint bank and investment accounts to establish individual financial control. Update beneficiaries on life insurance policies, retirement accounts, and estate plans to reflect your current wishes. If applicable, notify financial institutions of any name changes to maintain accurate records and ensure a smooth transition during this significant life change.
Build an Emergency Fund
Building an emergency fund after divorce is essential for financial security. Determine an appropriate amount for your emergency savings, typically three to six months’ worth of living expenses. Set a monthly savings goal to steadily accumulate funds, ensuring you’re prepared for unforeseen expenses or emergencies. Consider automating your savings through direct deposits or scheduled transfers to maintain consistency and steadily grow your emergency fund over time.
Plan for Taxes and Understand Your New Filing Status
Planning for taxes and understanding your new filing status after divorce is crucial. Familiarize yourself with the tax implications related to alimony and child support, as they can impact your financial situation. Review your new tax filing status, typically single or head of household, and update tax withholdings accordingly to avoid surprises. Consult a tax professional for guidance on post-divorce tax planning, ensuring you make informed decisions and optimize your financial outcomes.
Consult with a Divorce Attorney
Dealing with the financial aftermath of a divorce can be overwhelming, so it always helps to speak with a legal expert regarding your case and implement their advice.
Taking a proactive approach and creating a post-divorce financial makeover plan is essential for long-term stability. By reassessing your budget, managing debt responsibly, updating financial accounts, reevaluating your goals, building an emergency fund, understanding tax implications, and getting a lawyer involved, you can lay the foundation for a secure and prosperous financial future in New York.
Remember, it’s never too late to take control of your finances and start fresh after a divorce.
Connect with Heidi Opinsky, Family Lawyer in NY Today to Get Help with Your Divorce Process
Connect with a divorce lawyer, Heidi Opinsky, at the Law Offices of Heidi Opinsky, LLC, today to get proper legal advice regarding the divorce process and how you can best manage your finances during and after your divorce.
Visit our website to send us a message or call 203-653-3542 now and we will get back to you as soon as possible.