Starting Over After Divorce
By Allison Bishop, CPA
Understand what you have – maybe a house, some retirement funds, bank accounts; and what you owe – things like a mortgage, a car loan, credit card or student loan debt. This is a snapshot of where you are today, and is the starting point for your financial future.
You will also need a good sense of what your post-divorce cash flow looks like. Add up the income that you’ll be receiving on a monthly basis (that may include wages, retirement distributions, child support, spousal support, and possibly other income from rental properties, trusts, or businesses).
Then go through your new expenses -everything from housing (rent or mortgage) to health insurance (perhaps you were on your spouse’s policy pre-divorce and are now on a new, individual plan).
It’s helpful to go through several months of bank statements to see where your money is actually going. Make estimates as you need to, and be sure to track expenses for several months. The numbers will tell you whether or not your new reality is aligned with your initial expectations.
Now that you know where you stand today, and you can imagine what the next few months and years might look like, think about what you’d like your life to look like in five, ten, or twenty years. Identifying your goals can help tremendously in making financial decisions going forward.
One suggestion I always make is to not make any huge financial decisions, such as major real estate investment – immediately after a divorce. You’re likely emotionally drained, and not at your best decision-making capacity.
Rather, take the time to carefully consider your decisions, and see if you can find trusted people who can talk you through this. If there’s no one in your personal life you would feel comfortable confiding in, seek out a financial professional.
And PS: There’s good news ahead: studies find that the longer women have been divorced, the better they say they are doing financially.