Financial Steps following a divorce?
If you are a divorced woman you are much more likely to live in poverty than a man. In fact, recent surveys indicate that some 27% of recently divorced women have an annual income of less than $25,000. With this in mind, if you have recently divorced it is critical that you take certain financial steps to protect yourself and your children.
It’s not unusual for most women to push past the divorce, the emotional upheaval, and the financial challenges and just want it to all be over. But unfortunately, if you are a new single woman or single mom you will be responsible for the financial decisions of your new family, including the bills, investments, debts, retirement decisions, and educational choices. This can be tough, especially if you were not involved with the financial decision when you were married.
So what financial steps do you need to take immediately following your divorce?
Financial Steps following a divorce:
1. Review your financial situation.
The first of many financial steps following your divorce is to take a financial inventory of your situation and make a plan to secure your financial future.
What does this entail? It could require getting new credit cards, changing your address and name, modifying titles on your houses and cars, updating the beneficiaries on your retirement accounts including IRAs, pensions, and savings accounts, and updating your driver’s license. Do not forget to close all joint accounts, especially credit card and bank accounts.
2. Review your health insurance information and options.
If you have previously been part of your husband’s insurance policy through his employer you need to find out what will happen to your health insurance coverage following a divorce. In some cases you may be eligible for an extension of healthcare coverage through COBRA. This type of insurance coverage, however, will not last forever and can be very expensive.
3. Open new credit card and bank accounts.
Divorce is permanent and the sooner you can separate your finances the better. The first step to protect yourself is to apply for a new credit card and make sure your finances are separated in a different checking and savings account. It is also a good idea to request a copy of your credit report and clear up any outstanding debts or inaccuracies.
If you have not established credit in your own name it’s time to start. Good credit can be critical to getting approved for future loans.
4. Create a budget and track expenses and payments.
If you have just divorced this is also the perfect time to put a financial budget in place. Not only can you track your own bills and income, you can also track payments made to you for spousal and child support.
Finally, one of the most important financials steps may be to talk to a financial adviser, especially if you feel like you need additional help creating a budget or figuring out a comprehensive financial plan. Your budget should include detailed information about your monthly bills as well as information about long-term financial goals such as retirement and college tuition.