How To Achieve Financial Independence After a Divorce
For some women, getting divorced may mean starting from scratch financially. Perhaps you weren’t working, don’t have your own financial accounts or were in other ways financially dependent on your former spouse. But no matter where you are starting from, it’s possible to gain your financial independence. In today’s “Financially Savvy Female” column, we’re chatting with Rachael Burns, CFP, financial planner and founder of True Worth Financial Planning, about the actionable steps women can take to achieve financial independence following a divorce.
1. Identify Your Financial Goals
The first step is identifying what your financial goals are now that you are single, Burns said.
“Will she be making any changes with her employment? How have her retirement plans changed? What is her goal for housing going forward? If she has kids, does she have any specific goals for their college or other expenses?”
2. Get a Complete Picture of Your Finances
Understanding your current financial situation is essential in order to figure out what next steps you need to take to meet your goals.
“She should get all of her updated financial information organized so that she knows exactly where she stands,” Burns said. “A lot of times, women have no clue where they stand financially immediately following a divorce, especially if they are managing their own finances for the first time. She should get a clear idea of all of her income coming in, whether it’s employment income, child support or alimony. She should also get clear on her expenses, which have likely changed quite a bit post-divorce. She should also take stock of any estate planning documents and insurance policies.”
3. Develop Strategies To Achieve Your Financial Goals
Once you know where you stand and where you want to be, it’s time to brainstorm some strategies to get you towards your goals.
“She may need to loop in an expert for help, like an insurance agent, financial advisor, attorney, CPA, mortgage lender, etc., for help with the technical details,” Burns said. “A small investment in expert advice can save her a fortune in the long run by avoiding costly mistakes.”
4. Keep Your Financial Independence Secure
When you are divorced, it’s important to ensure you have the proper precautions in place to secure your financial independence.
“She should explore insurance strategies to secure her employment income and spousal or child support,” Burns said. “She should also make sure she has the estate planning documents in place to express her financial wishes in the event of disability or death.”
GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.
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