If you were divorced last year and since that time, you’ve been distracted with the holidays, celebrating your new sense of freedom, or even contemplating new year’s resolutions in your post-divorce world, you likely haven’t taken the next steps you need when it comes to your finances.
Many clients tell me that they feel stuck or paralyzed by all they have to do post-divorce. That isn’t surprising as there are three typical reactions when you are fearful, stressed, confused, or overwhelmed, which are to flee, fight, or freeze. If you find yourself in one of these reactive modes, you likely need a little extra support. In this post, we’ll detail what to do if you are newly divorced in the new year and the important to-dos you must complete now to protect your financial future.
Make Peace with Feeling Overwhelmed
As we mentioned, feeling overwhelmed is normal post-divorce. You may feel as if you are trying to get a grip on income and spending, especially after the holidays and asking yourself why this change in lifestyle is so painful. You have heard that updating your beneficiaries and estate plan is crucial but with everything else you need to do you put it on the back burner and wonder if it’s really necessary. If you are tackling all this alone, it probably feels like a full-time job to organize all the change with limited expertise and time. In fact, you may feel like you have still been making the biggest decisions about work, investments, and living situations all by yourself.
However, if you have been checking off some of your financial to-dos, that is good news as the longer you wait, the bigger mess you can create. And, by losing time, you can also lose the opportunity to earn money. For example, procrastinating on tax planning can put you in a bind and leave you without ample time to determine the best tax strategy. This is especially true if a lot has changed with your taxes so the more you know, and the earlier you know it, the better. Now is the time to think about taxes, the list of to-dos you must complete, and finding the right team to help you achieve your financial goals.
Take a Next Step
Yes, we understand that you feel frozen, burned out, or confused following your divorce. Rather than accepting or avoiding the things you don’t understand or simply don’t want to do, take action now. This is especially true if your spouse handled the finances in your marriage and now you are left with limited knowledge of what needs to be done. Here is a list of action items to get started on as you take your next step:
- Complete the Post-Divorce Financial To-Do list. If it feels overwhelming, set a goal to complete a part of this list per week until the list is complete. Lean on a professional to help.
- Answer the big questions. The most significant questions will help you understand your financial strategy. Don’t put them off, and get the professional analysis you need to answer them thoroughly. These questions include:
- Should I go back to school or work?
- Should I move?
- How much should I be saving?
- When can I retire now?
- Has my QDRO been processed yet?
- Was I supposed to receive gains from my accounts when they were split? How much should I have received?
3. Work with a financial expert. You will save time and money, accelerate your progress, and get your questions answered quickly with the right expert. If you wait, you may run into the following scenarios and even one month can make a difference:
- Not earning money with your investments
- Exposing yourself to too much risk
- Leaving too much money sitting in savings
- Poor diversification
- Spending too much money and not understanding your true cash flow
By working with a financial professional right away, you can get through your post-divorce financial to-do list quickly, and be ready to control your new future and make adjustments that reflect your values moving forward. During this transition time, a professional can also ensure you accurately received funds based on your divorce agreements, such as gains or losses on accounts or other unrecognized issues that you may not have even considered, and create efficiencies right away.