Don't Let Economies of Separation Define Your Life and Finances

Taking charge of your finances is definitely an important factor if you want to live a fulfilling life. This not only allows you to make your decisions with better clarity but also makes sure that your hard-earned money is being invested in the right places. The need for financial planning becomes all the more critical when you are going through a life changing event like a divorce or a separation.

While going through a divorce can be mentally and emotionally draining, with thorough  planning, detailed paperwork, and clear communication, you can get through this phase of your life in much better shape than you expect. For a lot of women, divorce could mean splitting up your estate could be especially challenging when you never took interest in the financial affairs of the household.

"Women who go through a divorce much earlier in their life don’t have to worry as much, than those nearing retirement, as they have enough time to bulk up their retirement savings."

As per the data by NIRS (National Institute on Retirement Security) based in Washington, D.C., the mean value of individual contribution accounts owned by married men total up to $84,874. On the other hand, for married women, these numbers drop down to $50,126. This total further decreases as the accounts for divorced men come down to $58,951 and for women, it is  $38,613. While this data is for the United States specifically, I see this pattern by large exist across demographics.

Women who go through a divorce much earlier in their life don’t have to worry as much, than those nearing retirement, as they have enough time to bulk up their retirement savings. Married women tend to take sabbaticals for raising their children and caring for other family members, their career and as a result their savings, can be much lower than their spouses. In such cases, planning for a divorce could further affect their savings. However, with correct financial advice and efficient planning, they can protect yourself from financial issues.

Here are some ways in which you can plan a fair share of your retirement assets during the divorce proceedings.

■ Research, review, and understand your situation

When you’re going through a divorce at a later stage in your life, you’re bound to be worried about your savings. So why list down your new short-term and long-term financial goals based on your situation? You can begin by accepting your new reality and gathering as much financial information as you can on the procedures, benefits, and critical facts. Set individual finance goals keeping your income stream, budget, and investments in mind.

■ Find an expert financial advisor

Once you know where you stand in your divorce, it’s best to consult a financial advisor before you start to close all the joint accounts and take other drastic measures. A financial advisor will check your credit score and create an income safety net so that your long-term financial plans are secured. You will also be required to adjust your budgets. It may cause inconvenience to you initially but may prove to be beneficial in the long run.

■ Analyze all possibilities

The biggest mistake that you can make while going through your divorce procedure is being a financial victim. If your spouse always handled all the financial matters and paperwork, they will surely have an advantage over the financial settlement procedures. By consulting an efficient lawyer, you should be able to access all the monetary information and total assets owned by your partner as well. If you and your partner can come to a fair settlement regarding alimony and property division then it’s best to resolve matters internally.

■ Ensure that your paperwork is on point

While going through this, create a list of unforeseen expenses that may occur in the future and the tentative solutions to tackle them. If you need child support, make sure to convey it to your partner. In case he refuses, you can file for a support order when you file your temporary divorce petition. Collect all the financial documents including the list of assets, debts, retirement plan, income information, and tax returns, and submit their copies to your attorney so that they can plan your financial settlement more efficiently.

■ Develop a future plan

After the divorce, you may have to adjust to several new realities. From protecting your private information to dividing all assets, you’re going to have to create a new life of your own. Maybe it is time to make changes in your career in order to secure your future, and if it is already secure, then you can focus on other aspects of your life as well.

The earlier you plan, the better. Even if you’re married or planning to get married, it’s important to set individual financial goals that may differ from your partner. Discuss, always debate and have an open line of communication about your finances. Lastly, my advice to you would be to take it one day at a time and seek help from experts. Consult a lawyer, a financial advisor and even a therapist to help you deal with the changes. A divorce can be a life changing event, how you deal with it, could change it for the better or for worse.

Author : "Abhishek Datta"

"Abhishek Datta has been offering sound financial advice as a Wealth Manager and Financial Planner to a diverse global clientele for more than 15 years and has been with Continental for more than 5 years. He started his career in the capital markets of India and transitioned to Wealth Management to provide a holistic approach to financial planning. Abhishek’s expertise lies in asset allocation, long term wealth creation and creating risk-adjusted portfolios for his clients." 

"He has qualified to be a part of the prestigious MDRT for four consecutive years. At MDRT 2018-19, he had the honour to be a part of the Court of the Table and the elite Top of the Table since then."

"His vision is to encourage youth and millennials to take the first step towards managing their finances from an early age. He offers a simple, uncomplicated approach focused entirely on helping his clients achieve their financial goals while assisting them in preserving and growing their wealth. He helps his clients build secure financial futures, leaving them free to focus on living their best lives."

Connect with Abhishek at Abhishek.Datta@cfsgroup.com
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