Ways to rebuild assets after divorce
Divorce takes an emotional toll on everyone involved. The process negatively impacts the financial situation of both Husband and Wife – assets, obligations, income and expenses. Dividing assets and incurring living expenses across two households instead of one can feel overwhelming. Finding ways to move forward means finding a way to adjust.
It can be too easy to fall into a moment-to-moment pattern. You see a need and try to meet it without keeping the larger picture in mind. Fortunately, though, you can rebuild assets and work toward your new future. To do so, you just have to create and stick to a new plan.
In many ways, following a divorce, it feels like you are starting over. You may have to find a new home. You will be adjusting to life without your spouse. The available income now has to provide for two households instead of one. Rebuilding financial security and assets can seem like an insurmountable challenge.
Still, it does not have to be an entirely new start. You have learned a great deal in your marriage. Life after divorce is not a return to the beginning so much as a step forward into your new life. It requires you to adjust, but that does not have to be negative. However, to be successful moving forward, you need to have a plan of action.
Your goals are not behind you; they lie ahead. You may need to save for a new home or a new car. If you have children, savings for college expenses can come into play. You will likely be saving for retirement as well. Each of these objectives means taking steps to plan for both your future and that of your loved ones.
Changing Your Lifestyle
This process will not be easy. After a divorce, you may have to make some lifestyle changes if you are going to achieve financial security. It is essential that you develop a budget and monitor it closely to ensure that you are not spending more than your income. Determining what you actually need is the place to start. You will need to prepare a budget that includes day-to-day necessities, reasonable discretionary spending, short-term savings and long-term retirement savings.
Even if you receive child support and/or spousal support, you may need to look at ways to increase income, reduce spending, or both. Remember, support that you receive will likely end at some point. Above all, do not fall into the trap of incurring debt to sustain your lifestyle.
Increasing your income and reducing your expenses only helps you save for a new home or car if you know what you need to save. Once you identify the goal numbers, you can figure out what you need to get there. If you lay out a workable plan, you can rebuild assets. You need to create a written plan to move forward, and then follow it.
Help Creating a Plan
All of this change can feel daunting. Going through a divorce is never easy, and creating a new financial roadmap for yourself may feel intimidating but it is essential to your success. Go it alone, and you might become frustrated before you see real progress toward your goals.
This is one area where the collaborative divorce process can help. In this process, you and your spouse will work with a neutral financial professional who can help you see past your anxiety to identify what you need to do. They cannot act as a financial advisor for either spouse post-divorce, but they can draw on their knowledge and experience to help show you how the financial decisions you make in the divorce can help you formulate a plan to rebuild assets in the future. To learn more about collaborative divorce, contact the professionals at Best Legal Choices to learn about your options.
Mr. Juilfs is the founder and managing member of Fair Share Divorce. He began his career in the Financial Planning industry as a Financial Advisor with American Express Financial Advisors in 1997.