Along with its emotional effects, divorce also has a variety of financial implications. Whether you’ve experienced a reduction of assets or have been ordered to pay alimony or child support, it’s crucial that you keep your finances in check while you adjust to this new financial situation. These budgeting tips from CNBC can help you do just that.
The first step is to review certain documents to make any necessary changes. Life insurance policies, retirement accounts, and other documents allow account holders to fill in beneficiaries, who will receive the proceeds of these accounts upon the person’s passing. If beneficiary designations are not updated, they will override any wills or other estate planning documents in place. Attorneys recommend reviewing these documents after any major life event, including divorces, remarriages, or the birth or adoption of a new child.
Your personal budget should also receive some attention. Start by taking your current income and deducting the total amount of your debt. This figure gives you an idea of how much money you’ll be working with each month. If you don’t currently have enough money to cover all of your expenses, look for areas to cut back. You can also try to increase your income by taking extra hours at work or looking for a side job until you become more financially stable.
While budgeting, you should also pay some mind to your retirement savings. Divorce usually has a serious impact on retirement savings, since this money is often divided up between spouses. You’ll have to reconfigure your retirement plans in this case. Some people extend the date in which they plan to retire, while others work more now so they can put money away for the future. No matter which option you ultimately choose, you must approach post-divorce finances thoughtfully and carefully to ensure long-term stability.