Important Financial Considerations for Divorced or Separated Women

If you are divorced or separated, the decisions you make about money will play a large role in your future financial security.  While we all know that money itself can’t buy or ensure happiness, your ability to manage your money will to a large extent dictate whether you will be able to reach a comfortable level of financial security so that you can live your life on your terms.

It does not necessarily require a huge allotment of time to get things moving in the right direction. It is often simply a matter of understanding your priorities and paying attention to the “basics.”  Below are some steps that I believe can help you gain solid control of your finances:

1. Pay Yourself First. Transfer a set amount from your earnings to your savings each month. An investment of $1,000 per month earning 8% annual interest could grow to over $180,000 before taxes in just ten years.

2. Reduce Consumer Debt. Avoid high credit card finance charges by paying off the balances monthly, or if you must carry a balance, use only cards offering low finance rates.

3. Maintain Good Credit. You can obtain one free annual credit report from each of the three major credit bureaus: TransUnion, Equifax, and Experian. Good credit is beneficial for receiving loans and low interest rates. Monitoring your credit can also help you guard against identity theft.

4. Diversify Your Savings and Investments. Develop a plan for your short- intermediate and long-term needs and if you are including investments with market exposure; establish a periodic schedule for reviewing and rebalancing your investments.  Make sure you consider your liquidity needs, risk tolerance, and time horizon and if possible, seek guidance from a professional.

5. Take Advantage of Tax Benefits. If you qualify, contribute to an Individual Retirement Account (IRA), a 401(k) plan, or another similar retirement plan. These plans offer tax benefits that can help enhance your retirement savings.

6. Update Your Estate Plan. Have your will and any trusts reviewed by a lawyer. Prepare advance directives, such as a durable power of attorney, living will, and health care proxy. This is important for everyone, since a disabling illness or injury, or an untimely death, could occur at any time, regardless of age.

7. Review You Insurance Needs. Periodically review your risk management program. Your life, health, and disability income insurance needs will likely change as you progress through various stages of life.

8. Plan for Future Care. Consider your possible long-term care (LTC) needs. Who will give you the assistance you need, should you one day require help with eating, bathing, dressing, toileting, or mobility? Long-term care insurance can enable you to receive this care in the privacy of your own home, should the need ever arise.

9. Build an Education Fund. College costs only keep increasing, and relying on your children receiving scholarships or financial aid is somewhat like hoping to strike the lottery. Consider opening a 529-college savings plan or Coverdell Education Savings Account. Start saving now, because eighteen years goes by very quickly.

10. Set Long-term Financial Goals. Establish one-, three-, five- and ten-year goals. Evaluate your progress yearly and make adjustments as appropriate to achieve long-term success.

The break up of a marriage is an emotional and often a very complicated matter.  Once the dust settles, straightening out your finances should be your first priority. Make a commitment now to start this planning process. Attention to these basic areas can help you achieve a secure financial future.
John L Diaz, CFP

Premier FInancial Advisors

14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343

Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.

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