Finances & Divorce

Finances & Divorce

Getting a divorce is not an ideal transition, but something you may be going through. Unfortunately, it is something that I have experience with, as well as several of my friends (and much of our society).  Through this, I have learned several do’s and don’ts to alleviate some emotional mistakes, especially at the beginning of the process.

Although every circumstance is different, there are general tips that hopefully will be able to help anyone going through this transition.  It can be a scary time, especially for those who haven’t been the one to manage the finances in the marriage.  The following tips can help to alleviate some of that stress.  

Take a step back from retail therapy

Make sure that your purchases and choices are not emotionally driven.  Think about what you are doing and if it is really necessary to make your purchases.  During this time, emotions are running very high.  You may be tempted to resort to retail therapy to make yourself feel better. You may suddenly want to buy a new car, a new house, or go on a big vacation.  Life-changing decisions may look enticing, however, these decisions could really add up and financially hurt you long-term.

Start building your own credit  

Start making sure things are in your own name. This is something that I would encourage even married couples to do. Have at least one thing in your own name.  Open a savings account and start saving.  You might think you can’t possibly do this if all your finances are going towards attorney fees or cost of living, but having a basic savings account will ease your mind and help you in the long run (even if you start with only $10-$15 dollars).  Having this cushion of accounts in your name will start good habits of saving. Creating a checking account and a credit card in your name is crucial. Establishing these things, allows you to manage your day to day expenses out of your own account.

Take note of your income, your expenditures, and start keeping accounts in balance

Budgeting can feel overwhelming, especially if you were not the one in the marriage who was involved in tracking your expenses.  Here is my advice, it doesn’t have to be a detailed spreadsheet, but just start by logging in to your accounts. We all want to be in control of our spending and avoid making financial mistakes.  That may mean not making those purchases that we can’t afford and are not necessary right now.  Maintain what you need for your cost of living and start focusing and following that in your new life.

Start reviewing all your beneficiaries and titles to your accounts

If you have retirement plans, 401 K’s, or trusts, start reviewing them.   If you want to make changes to these plans, you may have wait until the divorce is final. However, it doesn’t hurt to start looking and getting familiar with what things are joint ownership and what things will need to be changed to individual ownership.  I have talked to several people who, years after their divorce, have still not changed their beneficiaries.  What this means is that if anything should happen to them (heaven forbid), then their retirement, 401K’s, or trust documents will go to their former spouse.  Be sure to look at those and make any necessary changes.

Give yourself a break  

You are under so much pressure during a divorce.  It is a time of high emotion and survival is your number one priority.  You need to take a breather and give yourself a break.  Don’t make any major financial decisions while you are in the middle of an emotional time.  Try to avoid buying anything major.  Don’t sign any paperwork when you are in the middle of something that is emotional.  Always talk to professionals and not just family and friends.  You are most likely going to get a lot of advice.  People love you and want to support you, but it is not always the best advice because they may not know your entire situation.  Take things with a grain of salt and then go and talk to a professional who can actually look at your entire financial picture.  A professional is someone who can help you with the basic financial plans, a CPA who can organize your taxes, or your attorney who can help you with the overall legal documents.  Have those discussions about what is an emotional decision and what is really helping you with long-term plans.

To review: take a breather, don’t make any major decisions, build your personal credit, get familiar with your financial plans, and talk with professionals.  You can do this.   I’m here for you if you need someone to talk to.  I’ve been through this transition and would be happy to assist in any way that you need.  Feel free to reach out.

How to Skip Boring Budgets and Find Financial Stability

How to Skip Boring Budgets and Find Financial Stability

 

 

After 15 years in the financial services industry, I’ve seen it all. And since then, I’ve taught a lot of women about money, about their business, and more. However, it’s important to make sure that everyone has the basics. This is an idea I’ve shared with many of my clients, but hasn’t made its way to my website before this. And that’s a shame, because this has helped so many other women just like you! So it’s time to talk about the basics to financial stability both here and in my weekly Financial Tip Tuesday videos.

 

So you’ll want to follow me on Facebook so you catch each of them live.

 

financial stability

The Foundation to Financial Success is Knowledge

So many women transition in and out of the workforce due to a wide variety of life circumstances. For some it’s having children, raising children, taking care of elderly parents, or something else. It’s statistically so much more so than our male counterparts. And because of that, women seem to have a greater fear around money and a different view of money.

And part of overcoming that money block fear is having the right mindset about money. So, I’m going to show you two very visual methods to better understand your money. It’s helped so many other women, so I’m sure it’ll help you, too.

First, we need to get over the taboo around the word “budget.”

 

Skip the Boring Budget – and Use This Pie Graph Instead

Instead of calling how I allocate my finances a budget, I like to see it as a pie graph.

That pie graph is made up of all of your gross income that’s coming in. Perhaps that’s from a salary, a business, from commissions, or somewhere else. Everyone’s total gross salary amounts will be different – that’s fine. Talking about changing that amount is for another day. Today, we’re talking about how to set you up for financial stability.

Now that you’ve got your pie graph visualized in your head, it’s time to see where that money goes – and how you should allocate it for your financial needs. It’s going to be split up by 25%, 45%, 15%, and 15%.

 

Here’s What Money Needs to Go Where – and How to Adjust it

Looking at your pie graph, you need to know that 25% of it (your gross income) is gone to taxes. Just think of that 25% of your pie as out. There’s some tax sheltering and savings you can do, but that’s much too involved for now. Just cut that quarter of the pie out.

 

The next 45% of your pie will be for foundational expenses. That’s your bottom line for what you need to survive. It’s things like:

  • Mortgage or rent
  • Utilities
  • Insurance
  • Clothing
  • Groceries
  • And any other basic necessities you need to live every month

 

Now, if you don’t know what that is, feel free to contact me for a little template you can use to figure that out. But it is something you need to pay attention to each month.

The next 15% of your gross income is savings. That’s saving for your future, and you really need to make it a priority. In fact, if you’re finding things too tight at the end of every month, you need to adjust your foundational expenses or your spending money – and leave your savings alone!

The final 15% of your pie is your fun money. If you’re in the midst of paying off debt, then you may be putting a large chunk of your fun money towards that. It won’t be fun right now, but having that debt paid off will be worth it!

So – now you know where your money is – and where it should go. And that is going to get you set up to be financially savvy and reach financial stability sooner than you thought possible.

 

Do you need some help shifting your mentality so that your business thrives? Let me be your second opinion. If you’re ready to go from entrepreneur to shining like a diamond with a fabulous six-figure salary, then let’s chat.

 

Financial Tip Tuesday! Super Simple Budget and… coffee

Financial Tip Tuesday! Want to get a handle on your money and keep more of it in your pocket?

Posted by Lori Hildebrand on Tuesday, August 28, 2018