When you are going through a divorce, it is normal to worry about the financial impacts. Obtaining a settlement, or litigated result, can prove expensive. The process can eat into your financial portfolio, and the divorce itself will often result in the division of marital assets. You are not alone in wondering how to rebuild financial stability as you embark on your post-divorce life. Avoiding typical “money mistakes” can help.
Avoiding financial errors after divorce
First, take steps to create and stick to a new budget. Your financial assets have changed, as has your cost of living. Even with spousal and child support, living on a single income comes with challenges. Conversely, paying child or spousal support while managing your own expenses is also a challenge. Doing things such as moving into a costly apartment may drain savings and investments.
Next, explore ways to preserve financial stability. For example, purchasing appropriate insurance policies, such as car and renter insurance, might mitigate losses after an incident. If you stopped contributing to a retirement account during the divorce process, now may be the time to renew those contributions.
It is a good idea to have a financial advisor review your portfolios and investments after a divorce, to help you take stock of how to best manage what are now your separate assets.
Finally, tax obligations prove unavoidable when working or investing. There may also be tax implications associated with the division of your marital estate. Take steps to understand those tax liabilities and obligations by meeting with a tax attorney or accountant.