Divorce can drain your finances and emotions, leaving you feeling overwhelmed. While your financial future might seem like a distant concern right now, taking control of your money can empower you and improve your overall well-being.
Divorce rates in the state of Illinois have been dropping over the years, and Chicago has been no exception to this trend. Still, a significant portion of the population, nearly 10% or over 230,000 residents, are currently divorced. So, despite the decline, divorce is a reality that many Chicagoans face.
Divorce is tough enough; let’s not add financial stress to the mix. At Purposeful Wealth Advisors, we specialize in guiding individuals through the transition to post-divorce life in Chicago.
Join us as we identify the challenges you may confront and present practical steps to steer you back on course toward a financially stable future.
Update Your Budget
Divorce can bring unexpected financial burdens. Attorney fees, tax implications of asset sales, and potentially lower income due to child support can strain your budget. For this reason, you may need to adjust your spending habits to this new reality.
You need to explore strategies to streamline the divorce process and potentially reduce attorney fees. Create a spending plan that prioritizes your needs within your new income. This could involve considering options like downsizing your living situation, finding ways to save on groceries, or reevaluating recreational activities.
Build A Cash Reserve
Building a financial buffer is critical after divorce. Aim for 6 months of living expenses in a readily accessible account. Rising interest rates can be a big help, but we’d still recommend putting away your money to a high-yield savings account or a money market account for some potential return.
Evaluate Your Accounts
Your financial needs may change after divorce. Review your existing joint bank and investment accounts to ensure they align with your new financial goals. You need to reevaluate your accounts and make sure they are fit for your current financial circumstances.
Dig deeper into your bank accounts. Analyze monthly fees, transaction limits, and interest rates.
- Do you need all those features in your checking account?
- Could you find a savings account with a lower minimum balance?
With your old joint credit card off the table, a new card in your own name might also be necessary. Consider consulting a divorce financial advisor who specializes in navigating the complexities specific to divorce settlements and post-divorce financial planning.
Check Your Credit Scores
Protect your financial future after divorce. Start by requesting your free credit report from all three major bureaus: Experian, Equifax, and TransUnion. These reports detail your credit history, but not your actual score.
Consider obtaining your credit score as well, as it can impact loan interest rates, insurance premiums, and even renting an apartment.
Carefully review your reports for any errors and promptly dispute them with the bureaus. These discrepancies can significantly affect your credit score, so addressing them quickly is crucial. Simply put – make sure you protect your credits.
Set Your Goals and Priorities
What once seemed like a shared dream might no longer fit your individual goals and aspirations. This can be an opportunity to explore new financial priorities and build a future that truly excites you.
Perhaps you’d like to prioritize spending more time with your children, explore a career switch that aligns better with your passions, achieve a healthier work-life balance, or even pursue further education. Set your goals asap and plan your finances accordingly.
Create a New Estate Plan
Divorce is a significant life event that often necessitates an update to your estate plan. Here’s why:
- Changes in Beneficiaries: Your ex-spouse should likely be removed as a beneficiary from your will and any financial accounts.
- Power of Attorney: Review your existing powers of attorney for healthcare and finances to ensure your wishes are reflected. Consider creating new ones if you don’t have them.
- Living Trusts: If you had a living trust with your ex-spouse, consult with an estate attorney about establishing a new one tailored to your current circumstances.
Focus on the Positives
Divorce can be a turning point, not just personally, but financially as well. It’s an opportunity to explore your earning potential, discover new budgeting strategies, and ultimately working towards achieving financial independence.
While it can be challenging at first, building a budget and reaching the financial milestones on your own terms can be incredibly rewarding. The sense of accomplishment and independence you’ll feel by managing your money successfully is truly empowering.
Work with Us
Life after divorce can be difficult, but there is no reason to face all the new challenges alone.
At Purposeful Wealth Advisors, our experts are dedicated to guiding you through the complexities, ensuring you find solid financial ground once again.
Schedule a call today and let’s get the ball rolling.
Any opinions are those of Purposeful Wealth Advisors and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.
