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    Finding Financial Stability After a Divorce

    By Brandon Miller, CFP

    Managing finances following a divorce can be emotional and overwhelming. Even the best-laid financial plans may seem complicated as you adjust to your new situation and next steps. No matter how complex your financial circumstances may feel, the following steps may help you to secure your financial future:

    Adjust your budget to match your current lifestyle. Start by calculating your new monthly income, including spousal or child support if applicable, and estimate what you expect to earn over the next year. If you are a stay-at-home parent or spouse, you may decide to re-enter the workforce to bolster your income. Or the time may be right to switch careers or seek a promotion.

    Next, look at your spending to see if you need to adjust your patterns. Whether you’ve decided to remain in your home or seek new living arrangements, crunch the numbers to see how much house you can realistically afford. Also, evaluate your lifestyle spending, including entertainment, dining out, and activities for your kids, to see if it’s necessary to trim your expenses. If possible, avoid making any major purchases until you feel comfortable with your updated budget.

    Consider your children’s future. If you have children, they will understandably take center stage in your planning. It’s important to start thinking about how you’ll handle future financial milestones. Milestones may include paying for private grade school, college tuition, the down payment on a home, or a wedding. If you’d like to help your children with such expenses, consider these questions: Will you receive financial support from your former spouse? Do you expect your kids to contribute? As each event approaches, be up front with your kids about what you can afford so they can set realistic expectations.

    Prioritize saving for retirement. No matter how close—or far—you are to retirement, make it a priority to update your retirement goals and continue building your nest egg. You are responsible for your own savings, and the biggest challenge you face financially is having enough money to cover what could be several decades of expenses. While retirement saving can feel overwhelming as you balance competing financial priorities, having a plan can help you feel more in control.

    Ensure you’re protected. An important step following divorce is to maintain, replace or establish insurance that will help secure your financial future. All forms of insurance should be reviewed and considered, and your beneficiaries should be updated if needed. Make sure you understand the specific benefits that you and your former spouse are entitled to, as well as the life, health and disability insurance policies that you both own through your employers. If you have children, whose health insurance plan will be used to cover them? Work quickly to establish an insurance plan to avoid financial risk of being uninsured.

    Consider the tax implications of your new marital status. Review your situation with a tax professional to see if you need to revise your tax strategy. Divorce can affect your tax situation in several ways. Impacts may include entering a different income tax bracket, providing or receiving child or spousal support, your investment strategy and your process for handling future tax returns.

    Dream and plan for the future. Once you have a handle on your new day-to-day finances and retirement, allow yourself to dream and plan for other milestones that are important to you. Do you wish to visit every continent? Pay off your mortgage before retirement? Open a small business? Whatever your dreams, determine the cost of each one so you know how much you’ll need to save. Save what you can each month, and keep in mind that even small amounts will add up over time. If you’re tempted to spend the money elsewhere, consider establishing a separate savings account.

    Don’t go it alone. Professional guidance from an attorney, tax professional, estate planner and financial advisor can ease the burden of managing your finances. It’s hard to start over, but you can do it. A financial advisor can help you with the complex decisions you face during a divorce and offer strategies for you to get on track to meet your new financial goals.

    Brandon Miller, CFP is a financial consultant at Brio Financial Group, A Private Wealth Advisory Practice of Ameriprise Financial Inc. in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.