Divorce can feel daunting, but there are a few steps you can take to ensure you financially recover and have the opportunity to reach your long-term financial goals. The path to financial recovery from a divorce starts with evaluating your cash flow, understanding your savings ability, and making an investment strategy that is aligned with your new circumstances. Below we will discuss these action steps, and share strategies to help you feel more prepared for a healthy financial future after divorce.
Evaluate Your Cash Flow
The first thing you can do to make sure you’re on the right track is to understand how much money you have coming in and how much is going out. Determine whether you are getting ahead, breaking even, or falling short each month. This evaluation will inform your financial decisions in the present so you can start down a better path into the future. To calculate your cash flow, you will need to determine your current income and acknowledge whether you expect that amount to stay consistent in the future (for example, are you currently receiving support payments that will stop in the future?). If your cash flow is coming up short or just breaking even, now is a good time to identify ways to reduce your expenses, increase your income, or both if that option is available to you.
Understand Your Savings
One reality of divorce is that you may have half the net worth you did when you were married. You can evaluate your current savings strategies to determine if they are still aligned with your new financial situation. Once you evaluate how much you are saving today, you may determine that you need to increase your contributions to your retirement plan at work, your IRA, or your Roth IRA. In your new financial landscape, you may feel overwhelmed by what feels like a regression. Through a comprehensive financial plan, there are options available to you in order to meet your goals. If this feels overwhelming, reach out to a Financial Advisor for help.
Make an Investment Strategy
There are several ways couples may choose to divide their investments in a divorce. Whether you decide to sell the shared investments and split the proceeds, or divvy up the investments as they are, you may need to reevaluate your investment strategy going forward. If you are in the negotiation phase now, it’s important to remember that when dividing your investments, not all dollars are the same. If you are not sure where to start or you are feeling overwhelmed with this process, one of the best things you can do is to consult with a Certified Divorce Financial Analyst (CDFA®) to ensure that you are making the best choices for your savings and your future.
Once the divorce is final and the accounts have been divided, it is a good time to evaluate how your accounts are invested and evaluate if that is still the best strategy going forward. If making investment decisions is out of your comfort zone, don’t be afraid to ask for help.
If you are feeling overwhelmed about how to get your finances back on track or unsure of what steps you should be taking next, our sister company, Feldmeyer Financial Group, can help create a financial plan personalized to you. You can reach us by calling (937) 610-5570 to schedule a complimentary initial consultation.