What women need to know to protect their finances before, during and after a divorce
Divorce is a challenging time for women. Emotional turmoil aside, many women are not sure where they stand financially during divorce proceedings. Financial struggles, lowered credit scores, and worries about investments and retirement are just some of the hurdles that you may face after filing for divorce. Some women, unfortunately, may also be victims of financial abuse, making it even more difficult to figure out where they stand financially.
For these reasons, experts highly recommend seeking the help of a trusted financial advisor if you are considering going through a divorce. Turning to experts for assistance will help to lift the burden of financial matters from your shoulders while you soldier through one of the most difficult moments of your life.
What should I do if I am considering divorce?
If you can already see divorce in your future, there are several things that experts recommend you do before going any further. Your financial security is important when making the transition away from married life and having a financial plan in place can help you protect your money during and following a divorce. This will help you achieve financial independence, despite any obstacles you might face.
- Understand your financial circumstances — In many households, the man is the one who makes most financial decisions. This is likely tied to the role of the man being the traditional wage earner for the household. However, as a single woman, you will not get to rely on someone else to make the financial decisions for you.
Get to know your finances now, so you can be better prepared to make short- and long-term decisions for your financial security.
- Identify your assets — You need to know how much money you have and what is in your name, as well as what is in your spouse’s name. Some of this might be shared, such as a mortgage, bank account or retirement account.
You also need to consider your liquid assets, such as property and possessions that are in your name. Being able to clearly identify what is yours can help you be proactive in keeping what is yours when going through a divorce.
Also, mortgage lenders expect payments to be made on time regardless of what is going on in your personal life. You and your spouse need to reach an arrangement about who is staying, who is leaving and how to share the responsibility of paying for the home that you shared. In many cases, it makes the most sense to sell it and start a new home in your own name.
- Look out for signs of financial abuse — Financial abuse occurs when one member in a relationship controls the other’s access to money and the use of it. One member of a relationship gaining too much control and power over a couple’s shared finances can force the other person to feel trapped.
There are seven signs of financial abuse that relationship experts warn us to be on the lookout for. If you feel that you may be subject to financial abuse, your financial advisor can help you regain your independence.
- Your partner has assigned you an allowance without any input from you about your desires or needs.
- You are expected to account for everything that you spend, even small everyday purchases. Your partner does not do the same for their own purchases.
- Your partner feels entitled to your money, even though you are not allowed access to theirs. Or, they insist that all money is “shared” money, while still prohibiting you from spending any of it.
- Your partner spends household money without your knowledge, or has an extra source of income that is hidden away from you.
- Your partner has opened and maxed out credit cards using your information.
- Your partner has threatened to cut you off financially during an argument disagreement, even a minor one.
- You do not have access to your own bank accounts, savings, investments, or retirement accounts and have to go through your partner to see them.
- Seek financial planning assistance — You should build up a team of trusted experts to help support you through your divorce and protect your finances. First, you should hire a divorce attorney. They can help you negotiate disputes rather than leaving it up to the court.
You should also work with a financial advisor who can help you manage your assets, protect your money and develop a financial strategy for your future. An accountant can provide tax advice.
What can I do to protect my financial future during and after divorce?
Finding yourself in financial limbo after a divorce may feel disheartening. You suddenly have to reconsider everything that you may have already planned for in your future. This includes building your emergency funds, investing and saving for retirement. Having total control over your finances can be liberating, but it can also be intimidating.
The CERTIFIED FINANCIAL PLANNER™ professionals at ProVise understand the financial difficulties a woman can face when planning on her own. There are several steps they recommend you should take starting immediately after your divorce:
- Open new accounts in your name — If you do not already have your own bank or credit account, you need to open one in your name. This is beneficial for building your own credit for any future loans or mortgages you might need to take out.
It also helps keep your former spouse from accessing your money and appropriating it as theirs. Also, be sure to cancel credit cards with joint responsibility.
- Start saving right away — Most financial professionals recommend having at least three to six months of your income saved for emergency and opportunity situations. As a single person without a partner’s income to supplement your own, you might want to consider saving more.
As the sole wage earner in your household, you are entirely dependent on your own income. You need to be prepared for unexpected circumstances like disability or unemployment.
- Understand your Social Security benefits — Social Security benefits can be complicated for anyone, but especially for a single woman. Women who are divorced can claim the benefits of their ex-spouse if they were married for at least 10 years. It is important to know how you are covered and when you can start collecting to maximize how much you can receive and use to supplement your retirement income.
- Determine how much you need for retirement — You should be aware of how much you have in retirement to live off so you can decide whether to delay your Social Security benefits. You are eligible to receive benefits at age 62, but your payments increase for each year you delay them until the age of 70.
This is especially beneficial for women with a comfortable retirement nest egg because women tend to live longer than men and can benefit from those higher earnings for longer.
Secure your financial independence during a divorce with the help of a ProVise financial advisor
There is no cookie-cutter plan for getting through a divorce and protecting your finances. At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can help you make the right investment decisions.
Our team is ready to help you navigate through your divorce and other financial challenges you may face in life. This includes moments like a divorce and whatever else life may throw at you.
Talk to a ProVise CFP® professional about securing your financial independence after a divorce
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about getting a fresh financial start? Contact ProVise today to schedule a complimentary consultation.