Articles
Category: Divorce and Money
Getting a Grip on Your Financial Future Post Divorce
No matter how long you and your ex-spouse were married, you may have set aside some of your dreams for one reason or another. Now that you are divorced, you can think about those dreams again.
Starting a new chapter in your life after divorce can be liberating and daunting. The possibilities are many, unknown and unclear especially when it comes to your finances. Take the opportunity to gather your thoughts and dream what can be possible.
Step 1: Goal setting is an important step in your journey to taking control of your financial future. Where to start? A good question to ask yourself is what do you want to accomplish in your life? What are your short-term, medium-term and long-term goals? Do you want to go back to school, start your own business, pay off your student loans, pay off credit card debt, or send your children to college? Write them down, dream big! You will need to prioritize your list from most important goal to the least important goal. Depending on how long your list is, you may want to focus on the top three or five goals to start.
Step 2: How will these goals be realized? We have to have the money talk. Yes, we now need to focus on your finances. You will need to estimate how much money will be needed to fund each goal and when you anticipate each goal to be accomplished. Once you have those figures, we need to look at your balance sheet.
Gathering Information: Your personal balance sheet contains a list of your assets and your liabilities. You need to make two columns, “income” and “expenses.” List your income sources, like salary, interest, etc. Under the expense column, there are two lists, “fixed” expenses and “discretionary” expenses. The fixed expenses are items like rent, car payments, food, clothing, taxes, etc. These expenses typically occur month after month, year after year. Discretionary expenses are items like dining out, vacation, gifts, etc. To get a good sense of the discretionary purchases, you may need to track your spending for a month or two. There are many apps that can help you track your expenses, or you can use pen and paper. This exercise will help you understand where your money goes. It is a good idea to go through this process on a semi annual, annual or more frequent basis to help keep yourself accountable to your goals and spending decisions.
Now What?: Total up your columns and subtract the total expenses from your income. Is your result a positive or negative number? A positive number means you have money available to being your savings plan. A negative number means your focus will be on reducing expenses before you can begin your savings plan. Even if your result is positive, you still need to ask yourself what expenses can be decreased or eliminated to free up additional money towards your goals.
Empowering yourself to get a grip on your finances today will help you realize your future goals and dreams. Your goals and dreams can be possible with patience and perseverance. Getting grip on your finances does not happen overnight, but with focus and determination on your side – you got this.
Maria L. Sciuto, CFP® has held the Certified Financial Planner® designation since 1997 specializing in general financial planning, investment management and portfolio design, college planning, risk management analysis, and client relationship management. Her Fee-Only practice serves clients in the Greater NYC Metro area and beyond.
