A divorce will typically impact your finances in a many different ways. While some of negative impacts can be minimized or avoided by strategic planning during the divorce process, it's common for divorced spouses to face a much more substantial financial strain than anticipated. Getting a divorce is an expensive process and you might be forced to move of your home.
You will also probably have to pay all the bills from just your paycheck and will have to now pay spousal support or child support. In most divorce cases, you will also have some work to do in order to rebuild your finances after the divorce.
Rebuilding your financial situation once the divorce is over frequently feels even more overwhelming than ending your marriage, and many believe it's not possible. If you are in a situation where your divorce was recently finalized, you might be seeking information about steps to take to rebuild your finances.
Every divorce has circumstances that are unique, but there are certain steps you can take to rebuild your finances that will allow you to move toward financial stability. During your divorce, your Los Angeles family law attorney will do everything in their power to protect your financial assets and rights.
However, there's no way around it: divorce is expensive. When the ink is dry on the final papers and you find yourself officially divorced, you may wonder how you can start to recover your finances.
Everyone's situation is different after a divorce, so you may need to consult a financial professional in order to get advice for your unique needs. However, there are some steps that most people need to take in order to get on a prosperous path after a divorce.
Take a Full Inventory of Your Financial Life
Before you can start improving your financial situation, you need to know exactly where you stand. Confronting the issue directly like this may feel intimidating at first, which makes some people put off this crucial first step.
However, getting a full accounting of your financial life can be empowering after a grueling divorce. Right now, it's time to take a realistic look where you are and put together an inventory of your financial situation. This includes income, assets, expenses and liabilities.
Because divorces can be so messy and confusing, taking inventory of your finances may take some time. However, it's worthwhile to slow down and do it correctly. You may need to consult your Los Angeles divorce attorney to help you understand which assets you have retained. In this full accounting, be sure to include:
- All debts
- High-value assets, such as your home
- Investment and retirement accounts
- Checking and savings accounts
- Sources of income
Once you have a complete picture of your financial status, you can take steps to improve it. It would be wise to create a spreadsheet to keep track of all the different categories.
Create Your Support System
Just like the divorce itself, recovering from a divorce can be difficult. However, having the right support system in place can make a world of difference. Of course, everyone should have some kind of social support network of friends and family. Social support may also include a divorce support group.
Depending on what struggles you face, you may also include professionals such as:
- Therapist or counselor
- Tax advisor
- Certified Public Accountant (CPA)
- Investment manager
- Financial advisor
- Estate lawyer
- Los Angeles divorce attorney
These professionals and more can help you navigate the many aspects of recovering from a divorce.
Be Sure All Your Accounts and Assets are in the Right Name
During divorce proceedings, there can be a lot of back-and-forth about who gets which assets. As such, there can be some confusion as to whose names go on which accounts after the divorce. However, when you make a full accounting of your financial life, you know what's yours.
Go through each asset and be sure your name is still on it. If your last name changed because of the divorce, be sure that all accounts have your new name attached.
Additionally, if your ex-spouse took on any debts for which you are not supposed to be responsible, you should ensure your name is not on these documents.
Finally, check any documents relating to end-of-life plans. You may need to change the beneficiary on your life insurance and your will. Similarly, take a second look at your power-of-attorney documents.
Make a New Budget to Fit Your New Life
Divorce affects every aspect of your life, especially your budget. Now that you know what your situation looks like in regards to housing, alimony, and child support, you can make a proper budget for your new life.
However, this can be easier said than done, especially if your ex-spouse used to handle the finances.
A financial advisor can help you get on the right track, or you can create a budget yourself. There are many different apps and spreadsheet templates available, and you can use whichever suits your needs best.
Identify Your Financial Priorities and Plan Accordingly
With a complete financial picture and monthly budget in hand, you can start setting financial goals and creating plans. Your particular goals should depend on your needs and the kind of life you want to live. Some common financial goals include:
- Create an emergency fund
- Save enough for six months of expenses
- Earn more, either through a career-change, raise, or side gig
- Max out your retirement account
- Cut expenses
Make a list of all your financial goals and then prioritize them. Then, make a plan to achieve your first goal. For example, if you need to have more income through a career change, consider what training you may need and how you can make this leap.
Get Help from a Los Angeles Divorce and Family Law Attorney
If you take the steps listed above, you will be placing yourself in a much better financial situation that when you first got divorced. It's crucial to create a financial plan based on your new circumstances.
A solid financial plan will lay out where you will most likely end up at some point down the road. Many feel it's an impossible task, but it can be done with careful planning and consideration.
The steps listed above won't change your life right away, but if you stay committed to the plan, then your financial situation will improve over time. Ask for help from family, friends, and other people you trust and those who have your best interest in mind. Rebuilding your life after a divorce is possible with the right plan.
Our Los Angeles divorce attorneys can help you from the moment you decide you need a divorce, throughout the process, and beyond. For example, we can help you make sense of your settlement and what assets you retained.
Furman & Zavatsky are Los Angeles divorce and family law attorneys located in the San Fernando Valley at 15821 Ventura Blvd #690 Encino, CA 91436. Contact our office for a free case consultation at (818) 528-3471.