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Considerations For Recently Divorced Women

More than half of all marriages end in divorce -- nearly 2.8 million men and women each year must deal with the emotional and financial complications of ending their marriages.  Women, particularly, are faced with fears about financial survival and the daunting statistic that while the husband's standard of living may improve by nearly 10% after a divorce, yours could drop by as much as 27%.  A number of factors can contribute to this harsh post-divorce adjustment, including the lost years for career growth as well as inadequate alimony payments and/or a pooled accumulation of debt.  It's difficult to face divorce under any circumstances, but with some financial planning, recently divorced women can navigate the financial pitfalls with grace and practicality.

Many women choose to concentrate on their families rather than on their careers when they are married.  Recently divorced women often must figure out ways to support themselves.  Luckily, you can seek career counseling at your local job center, university, or community resource center.  It is common for you to feel overwhelmed by the plethora of choices and decisions you face after a divorce-- and it's easy to want to retreat from the chaos as soon as all the papers are signed.  But there's nothing like new knowledge or a fulfilling career to bolster your self confidence as you embark on your new chapter in life.  And if going to work is something you must do now, it's well worth the time it takes to visit a career center and get professional help with putting together your resume and refreshing your interview skills.  

Divorce can be complicated, and it makes sense to get all the help you can, in many different areas.  Attorneys can give excellent advice, and it's important to find someone who will work for you and work with you as you sort through your agreements.  Although the financial aspects of divorce can be overwhelming, it's often wise to spend money on professional services that will help you plan and save money for the future.  The same goes for a therapist who can help you emotionally and a financial advisor who can help you decide on your best settlement options.  While it's intuitive to weigh all of your options and keep a keen eye on your checkbook right now, remember that it's also prudent to not skimp on these matters that will affect the rest of your life.

As you start to come to terms with your divorce and you begin to get an idea of your financial situation, taking control of your finances is the next most important step for recently divorced women to take.  It may sound trite to those of you who feel like the captain of a sinking ship right now, but the upheaval a divorce can cause is also a perfect opportunity to start looking at crises as opportunities to make strong decisions and assert your own power over your life.  You've just learned that ignorance is neither bliss nor cheap, and now it's time that you start moving forward with well-informed decisions and a plan for your future.  Taking matters into your own hands-- collecting ideas, making decisions, and seeing them through to fruition-- is a positive step towards reasserting your independence.  If you weren't an active negotiator during your divorce, now is the time to partner with a financial advisor who will help you assess your situation and guide you through the process of post-divorce compromises that might involve your children or grandchildren.  The decisions are ultimately yours, and now that you find yourself single again, it's important that you take full advantage of this period in your life where all the decisions matter again.  Every little thing can shape your life.  That can be daunting, but it can also be exciting.  And with a financial plan that focuses on what’s important to you, it doesn't have to be scary.

Recently divorced women often find themselves working out of the corner that years of being supportive and sensitive to their husbands has painted them into.  Divorce is more about survival than anything else, and as someone who has just been put through an emotionally exhausting process like divorce, it's sometimes difficult to not mix money and emotion as you move forward.  Were you able to get a lump sum, or will you be working with monthly payments?  How will you deal with the scenario of controlling all the cash?  How will you deal with a scenario where you will be waiting for a check?  Don’t panic.  It's important to stand up for yourself and what's yours.  And it's important to be able to take care of yourself financially and be prepared for anything that might happen down the road.

The biggest financial issues arise from how you think about your future.  What is it that you want?  It may take some time to figure that out exactly.   But there are a few key concepts that recently divorced women can keep in mind as they begin to create a picture for yourselves of what your future might look like.  Don't overlook your assets, for starters. Keep an inventory of what you own now and decide what to do with it.  Keep any records you used in the divorce in case anything comes up between you and the IRS once everything is finalized.  And don't hesitate to go over them thoroughly with a professional in case there are things hidden away somewhere that you forgot during the proceedings.

Potentially the most important financial step you need to take is confronting the tax implications of your divorce.  Did you decide on monthly payments or a lump sum?  Should you sell the house now or stay put for a little while?  The hidden tax costs of a divorce can cause some unplanned discomfort, so having a tax professional and financial advisor to help you assess your situation can pay dividends in the long run.  An accountant or divorce specialist can help recently divorced women to calculate the best path for long-term security.  Should you leverage the brokerage account or cash in your retirement plan?  The right advisor will know how to help you make these decisions so that you don't wind up losing the majority of your settlement to taxes.

You're no doubt realizing that divorce can be a drain on your finances.  It's never too early to start financial planning, and even if you're already divorced there are ways to help your money grow so that you can rebuild your financial resources.  Recently divorced women may find yourselves angry again with every late alimony check or depressed by every monthly bill you never had to pay before.  But don't let your new financial life keep you from feeling optimistic about your future.  Once you know where you are going, you will have something to look forward to again.  It's never too late-- or too early-- to find a financial advisor to help you create a plan that will give you comfort and confidence in your life – both now and in the future.  

Finally, now that you are divorced, it's time to tie up the loose ends that you probably weren't thinking about while you were dividing property and cleaning house (literally and metaphorically).  But now that you are divorced, it's time to tidy up all the financial documents that you might not have been thinking about while married. One of the final steps for recently divorced women to take is to rewrite your will and change your "in case of emergency" contacts and your beneficiaries on your insurance policies and retirement accounts.  Review your investments.  Straighten out your files so that you can move ahead with everything squared away.  You are beginning a new chapter in your life.

Whether it’s human nature or conditioning, the fact remains that women and men tend to think differently about money and finances.  Additionally, women tend to live longer than men and must be prepared to plan for elder years with a different set of ideals.  There are many considerations to be made when a woman becomes single again and must take charge and reclaim her life.  The needs of recently divorced women are far-flung and can vary from decisions about whether to rent or buy a home, setting a monthly budget, and getting bills changed to your name.  What's certain is that you are taking the steps to grow into your new lives as independent women, and the process can be both empowering and overloaded with emotion.  Know that there are places and people you can turn to for help.

This e-mail does not constitute a personal recommendation or take into account the particular investment objectives, financial situations or needs of individual clients. Past performance does not guarantee future results.  Wealthcare Capital Management's disclosure document ADV Part 2A can be found here

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Comment   |  7 years, 10 months ago from Atlanta, GA