Financial Decisions You Need to Make Post-Divorce
Did you know that a divorce occurs every 36 seconds? It is sad, but you have to remain level-headed if you want to stay afloat financially after a divorce. Here are some financial decisions you need to make to guarantee that.
Close Your Joint Accounts
It is normal for spouses to open joint accounts and, while that is commendable, it could turn out to be a liability that will bite you in the back during a divorce. You don’t want to be the one dealing with overdrafts on such accounts, do you?
The best course of action would be to close any joint accounts that you have with your spouse as soon as it is confirmed that you are getting a divorce. Suspend the account if you have a balance that cannot be paid off, and confirm with the bank that the account cannot be unsuspended or re-opened.
Open an Emergency Reserve Account
As a single person, you need to have a cash safety net more than when you were married. Ensure that you fund a bank account with about six months of your living expenses. Better still, you can put that money in a short-term bond fund to gain interest on it, seeing as bank interest rates are extremely low.
Change and Update your Beneficiaries
Do not overlook the need to update and change your beneficiaries after a divorce. If you have named your spouse as a beneficiary, you need to change that as soon as possible. The last thing you want is for them to end up with your valuables if you should pass away suddenly. Changing and updating your beneficiaries is as simple as filling out a form.
Put Assets In Your Name
You probably owned several assets jointly with your spouse. After a divorce, that needs to change. For instance, you may want to retitle a house owned previously by both of you to belong to just you. Keeping in mind that 38,900,000 households in the U.S. own a cat, this applies to even the pets you may have owned together!
Update your Insurance Coverage
Upon the confirmation of your divorce, you want to reach your insurance agency and update your insurance coverage for umbrella liability, homeowner’s, and automobile coverage. Pay special attention to the assets listed in the homeowner’s policy. Usually, things like artwork, firearms, and jewelry may not be applicable if your ex received them in the divorce. You don’t want to pay insurance premiums for assets that do not belong to you.
Make a New Estate Plan
A divorce is a big deal. As such, you want to think about what will happen to your estate plan. Studies show that about 71.6% of the American population does not have an updated will. So, if you have kids, you may have to update your will. Your estate plan will definitely change as a result of your divorce. It’s critical to think about updating your will, living trust, and power of attorney forms.
Create a New Financial Plan
As you go through your divorce, you want to work with a financial planner to help you assess your financial situation, especially once the divorce is done. You need to know what you should be saving for retirement-wise as well as how to maintain your financial security. Now, you may be unable to afford a financial planner, and that is understandable. If that is the case, you want to come up with your own budget. List your sources of income as well as your expenses. From there, it will be easier to determine how much to spend, save, and invest.
A divorce doesn’t have to bring you down to your knees. Nevertheless, you want to ensure that you remain above the water when it comes to your finances with the financial decisions mentioned here.