Ending your marriage is one of the most life-altering actions you can take, and the process can significantly impact your finances. Divorcing your spouse undoubtedly has an effect on your day-to-day lifestyle as well. Dividing property, legal costs and living on a single income can all wreak havoc on your financial stability.
During the course of your divorce, you may lose some or all of your retirement funds, investments, business interests and real estate. While all this is going on, your income may fall as your expenses rise. Thankfully, not everything is bad news. There are some simple things you can do to improve your financial situation.
1. Take inventory of your finances
To manage this tumultuous situation, you must understand your current circumstances. Create an inventory of all your finances, including:
- Income
- Assets
- Expenses
- Debts
Organize these items in a binder or spreadsheet. By simply creating a single place where you can understand the big picture of your finances, you will make your life much easier. Remember, knowledge is power.
2. Make a new budget
Your post-divorce income and expenses may be stressing you out. If you are not careful, you may find yourself in a hole of debt while you adjust to your new lifestyle. Start keeping tabs on what you spend. You may need to cut some discretionary or luxury spending or look for a new source of income.
3. Prioritize your next steps
Once you have the basics under control, it is time to figure out what you must devote most of your attention to. If you do not have enough income to manage your current budget, then perhaps finding new work may be your core concern. On the other hand, if you have enough income but are still struggling with the aftermath of your divorce, you can consider talking to a trustworthy friend, family member or even a financial planner.
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