With your financial house in order, you will have a stronger, more resilient foundation
Kim Sharan, 5/2/2014 Mint
The fairy-tale image of marriage is one that goes on happily ever after. Unfortunately, that fantasy sometimes clashes with reality, and many couples ultimately decide to go their separate ways.
Women entering into the process of marital separation or divorce face the daunting challenge of rebuilding a life that was once shared with their spouse. Added to the emotional devastation, splitting up can cause significant financial stress as possessions are divided and each partner is left to piece together his or her own financial plan.
For many women, this transition may mark the first time in a long time—or, in some cases, ever—that they have had to take control of their money. The prospect of this may be intimidating. According to a research issued by Ameriprise India, only 63% of married women report feeling financially confident. This compares to 70% of single women. Meanwhile, a reverse trend seems to be true for men and marriage; 66% of married men surveyed reported feeling financially confident, while only 56% bachelors felt so.
These findings suggest that within the context of marriage, many women defer to their spouses when it comes to handling the family budget and financial decisions.
Thus, with the end of marriage often comes the need for women to step into the role of chief financial officer of their households.
It’s easy to feel overwhelmed if budgeting and investments are not areas of personal expertise, but it’s more important than ever for women in this situation to take control of their assets and secure their financial future.
So, if you find yourself suddenly single, you can consider these tips to get your journey to independence off on the right foot and as soon as possible.
Assess your current financial situation: Gather investment and bank statements, tax papers, credit card bills, insurance policies and other documents to get a clear picture of your assets and liabilities. Once you have a handle on your total net worth, begin tracking daily expenses.
Write down how much you spend on utility bills, transportation, groceries and other expenditures. Calculating monthly averages will help you create a budget that reflects the new dynamics of your household. If your spending exceeds the amount of money you take in each month, you may need to identify areas where you can cut back on expenses, or consider ways to boost your income, such as re-entering the workforce or taking on a supplementary part-time job.
Update your accounts: Be sure to close jointly held checking accounts, credit cards and other accounts on which you are listed as a co-owner to avoid being held liable for future debt incurred. If your parting spouse is the current beneficiary on your investments and insurance policies, now would be a good time to change it. Also, take the time to re-evaluate your policies and confirm that you have adequate coverage for you and any dependants. Nothing can derail your financial security faster than an uninsured accident or illness.
Lastly, create a will or revisit your existing one to make sure your children and other dependants, if any, are cared for and your property is passed down according to your final wishes.
Take emotion out of financial decisions: The period following a divorce or separation can bring with it waves of emotions. Sadness, anger and even relief may all be a natural and healthy part of moving on, but they can also cloud your judgement. The tendency to overspend on children in an attempt to ease guilt over the marital split is a common example, as is the inclination of women to keep ownership of the family home to maintain a sense of continuity, even if it would make more financial sense to downsize.
Don’t make choices based on how you’re feeling on a particular day if it’s not the right move over the long haul. Postpone big decisions until you have a clear head, or seek the counsel of a trusted adviser who can put things into perspective.
Plan for your future: As you embark on your journey as a newly independent woman, now more than ever it’s vital to take control of your financial future. Meeting with a qualified professional and creating a written plan based on your unique portfolio, risk tolerance and time horizon can help you stay on track to achieve your goals and retire with confidence. With your financial house in order, you will have a stronger, more resilient foundation on which to build your new life.
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