5 Financial Tips for Couples Facing Divorce
According to the Forest Institute of Professional Psychology in Springfield, MO, 50% percent of first marriages, 67% of second marriages, and 74% of third marriages end in divorce.
That means people – a lot of people, unfortunately — are dicing up their money and assets in every conceivable way. Divorce often means that homes are sold, boats are sold, 401k accounts are split. There are new tax situations to understand, child custody disputes, and other legal implications that hover over the experience.
It can be much cheaper (though far more psychologically painful) to stay together than get divorced.
I once went through divorce myself, and though it was an unhappy time it has given me some insight to pass onto clients who are going through it now. Here are 5 tips for people who are planning the finances of their divorce.
1) Have a great team in place. I’m not just talking about the lawyer who’s going to “win big” for you. I’m talking about the person who can make a financial plan for you and or your children going forward. How will you pay the bills monthly? After you pay your debts, will you have enough retire? How many more years do you have to work? What about affording college for the kids? These are some of the key questions a financial advisor can help you with.
2) Get educated. The Internet is full of information, and I ask my clients to use it wisely. Before a monthly or quarterly meeting, I’ll give them some popular terms — $401k rollover, annuity, 529 college savings plan, alternative investments, and others – to research online. Our meetings are always more productive when a client takes on the homework. Getting educated in this area of your life will help you make good decisions for your family.
3) Consult a qualified tax advisor. Hire a professional who really knows his or her stuff. They can help you wade through all the many filing options. Also, it’s good to find an advisor who has a good CPA to refer you to. With all the annual tax code changes it helps to have a top notch person in this area.
4) Get organized. Many women have never had to handle the financial side of their lives. Now, amidst divorce, they must learn on the fly. Avoid getting overwhelmed by staying organized. It might be as ordinary as writing checks to pay the bills, or keeping track of debt online. You’ll thank yourself for staying on top of it all.
5) Try something new. No matter your situation, it always pays to take the high road and do the best you can. Personally, I was divorced in 1997 and learned a yoga practice that has continually grown and expanded me physically and mentally. In every disappointment in life there lies an opportunity, and in this case yoga was mine. In this difficult time, you might find something that will change your outlook forever.
Click below to hear Win Damon and I chat about financial planning and divorce on at wnbp.com and 1450 am WNBP Newburyport every Tuesday at 8:30 am
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Stuart Steinberg is a Financial Advisor with, and Securities and Financial Planning is offered through LPL Financial. A Registered Investment Advisor, member FINRA/SIPC. You can reach him at Eaglerock Financial, Inc. 55 Pleasant Street, #206, Newburyport, MA 01950 (978) 864-9581.