In many marriages, financial matters are the responsibility of one of the two spouses. When a separation occurs, the spouse not active with the finances during the marriage is often overwhelmed when it comes to dealing with their financial situation on their own. Financial counseling can help limit the risks of divorce. Following are some of the key financial ideas that should be considered following a divorce.
Assess your situation
Review your entire financial situation and assess your current cash flow. It’s important to research where all of your income is coming from and if it meets your life and lifestyle needs. A person must be sure they’re equipped financially for the future and put a budget and financial plan into place that will help them to be sure they can live comfortably for years to come.
Review your Estate Plans
Immediately upon your divorce, you need to review and change your Will and/or Trust beneficiaries to maintain your current wishes. Planning that once took into account a marital deduction must now change course to adapt to your new single status.
Establish a Financial Plan
If estate planning is a blueprint for when you pass away, financial planning is the blueprint for your life. Just like a personal trainer, a good financial planner will keep you on track.
Hire a bookkeeper
While a financial planner provides the blueprint, the actual builder can be a bookkeeper. Many charge around $30 per hour and are extremely efficient at tracking your spending and cash flow. Whether their services include paying bills, balancing checkbooks or providing a monthly stipend, a bookkeeper’s efforts can help save a person a lot of time, energy and money. The bookkeeper can often work with bill payment on line, a service offered by many financial companies. This expedites the bill paying exponentially and saves the bookkeeper time and you money
Consider Direct Payment
Auto financing, credit cards, and other large monthly payments will stay on track with direct debit from an appropriate bank account. This will go a long way to preserving credit and not missing a payment that could cost a quick 20% in finance charges.
Line of Credit
Consider obtaining a line of credit for the unexpected large expense item. Most private bank companies are willing to extend this credit line and use your investment management account with them as collateral. The strength of this collateral often results in a slightly lower interest rate and immensely simplifies the application process.
Review insurance policies, IRAs, 401ks, and deferred comp. plans
Another area that is often overlooked involves retirement plans. It’s important to review all of your plans and make the necessary changes in regard to beneficiaries and the policies you want to maintain. If you are in sales, your sales plan may even have a designated beneficiary if you pass away before an earned commission is paid. Be sure to check your commission plan as well.
Work with a single source
Working with a single source of responsibility when it comes to your finances will help keep things uniform and in proper order. By selecting a single service provider for banking, loans, financial planning, philanthropic matters and bookkeeping you will find that your matters could be handle more effectively and efficiently. Spreading these things across different companies can cause confusion, and you won’t receive the level of service you deserve.
Change past relationships
If your financial matters are still in the hands of your former partner’s financial service provider, consider making a switch. It’s good to get a fresh start, not only for yourself personally, but for your finances as well.
Hudson Mead is a Managing Director at First Western Trust Bank, a private bank and trust company providing wealth management services including private banking, investment management, personal trust and family office services to successful individuals, families and their businesses. He can be reached at email@example.com.