One of the things I love about this site is the opportunity to have experts in certain areas of divorce and post divorce give their advice to all of you! Recently, I connected with Suzanne Cramer, who is a certified credit counselor working in CareOne’s Ask the Expert forums as a coach and a Social Media Specialist for CareOne.
Suzanne writes for Divorce, Debt and Finances and A Straight Talk on Debt blogs. Ask her questions, share your story or just follow Suzanne on her journey as she navigates dealing with divorce, debt, and finances. Suzanne is also very active on Twitter and manages two CareOne accounts: ADivorcedMom and Ask CareOne where she shares the latest debt industry news and tips to keep your finances in check. This is some great advice from Suzanne.
Going through a divorce can do a number on your finances, and waiting for a divorce settlement takes patience. But what do you do when you receive it? Go on a shopping spree? Pay off your debt? Invest? Anytime you come into a sizable sum of money it can be life changing; how you decide to appropriate the money can define your future. The choices you make may determine financial independence, so proper planning is essential.
Your thoughts and feelings toward money will often determine the end result. Ask yourself how your prior relationship with money helped or hurt you. Do you want to live the life you are accustomed to for a little while, or be comfortable in the future by adding a little frugality to your life? Determining how you want to live may help you determine how to manage your divorce settlement.
Your divorce settlement may signal a fresh start, a chance to rebuild your life, and an opportunity to start saving for your financial future. Think long-term, plan for long-term, and think it through before taking action. Having trouble gathering your thoughts? Check out these seven tips:
- Keep up your guard. Some say money is the root of all evil and sometimes it is. When others hear of your sudden financial windfall they may try to take advantage of you and your vulnerable situation. Proceed with caution when it comes to your decisions.
- Create a budget. While blowing through a windfall such as a divorce settlement may make you feel better in the short term it is important to look toward the future. Take a close look at your monthly obligations and establish a budget to include the necessary costs of living, such as your home, utilities, taxes, and food.
- Prioritize your finances. Consider both short and long-term goals for your money; i.e., paying for college for the kids, saving for retirement, becoming debt free, going on vacations.
- Don’t change your lifestyle. Even if the settlement provides you the wealth you need to quit your job, hold off. By uprooting your daily routine you may find yourself feeling down and out and not sure what to do with yourself. Find your way slowly, take your time, and consider all your options.
- Consult your attorney. Your attorney is an outside, objective party that can help you anticipate your future needs.
- Draft a will. This is especially important if you have kids, but still important if you don’t. You want to be sure your intentions are carried out.
- Consult a tax advisor. Proper planning can help you get the most out of your settlement now and in the future. You will want to consider all of your financial options such as annuities, trusts, and life insurance, to provide the best possible situation for you and your family.
Have you been through a divorce and received a sizable settlement? How did you handle the financial windfall?