Divorce can be emotionally and financially draining, leaving you with the challenge of managing your finances on a limited income. It’s a tough situation to navigate, but with the right guidance, you can maximize your savings and regain control of your financial future.
In this article, we’ll explore how to make the most of your finances after a divorce to help you on your journey to financial stability, with the help of a Certified Divorce Financial Analyst®.
Understanding Your Financial Landscape
Life after divorce often brings a new financial reality. It’s crucial to understand where you stand financially. Make a list of all your assets, debts, and monthly expenses. This includes everything from your mortgage or rent to utilities, groceries, and entertainment expenses. By having a clear picture of your financial situation, you can begin to make informed decisions.
Create a Spending Plan
Budgeting can be a cornerstone of managing a limited income effectively. Start by listing your essential expenses, such as housing, utilities, groceries, and transportation. Allocate a portion of your income for these necessities, and then set aside a reasonable amount for discretionary spending. Creating a budget can sometimes feel restrictive in the beginning, but budgets can also help reframe your mindset and ensure you are spending your money in the areas that are a priority to you.
Build an Emergency Fund
Life is unpredictable, and emergencies can happen at any time. Building an emergency fund creates a cushion and peace of mind for when “life happens”. Aim to save at least three to six months’ worth of living expenses in a liquid bank account.
Debt Management
Debt can feel like a significant financial burden. Work on reducing high-interest debts, such as credit card balances, as quickly as possible. Consider consolidating or refinancing options to lower your interest rates. The sooner you have a plan for your debts, the more financial freedom you’ll gain.
Prioritize Saving for the Future
Even on a limited income, it’s crucial to prioritize saving for the future. Set up automatic transfers to a savings account or retirement fund as soon as you receive your paycheck
By making savings a non-negotiable part of your financial plan, you’re ensuring that your future remains secure.
Seek Guidance from a CDFA®
Navigating post-divorce finances can be complicated, but you don’t have to go it alone. Consider hiring a Certified Divorce Financial Analyst® (CDFA). A CDFA® can help you understand the financial implications of your divorce settlement, including the tax implications. They can also assist in creating a long-term financial plan tailored to your unique situation.
Divorce can be a challenging chapter in life, but it doesn’t have to derail your financial future. Remember, it’s a journey, and with determination and the right strategies, you can achieve financial stability once again.
Work with us
If you have more questions about divorce, our team is here to help you every step of the way. At Purposeful Wealth Advisors, we work closely with divorce attorneys, accountants, and other dedicated professionals to arrive at comprehensive solutions for our clients.
Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.
