Going through a divorce in California can devastate your finances. In addition to the cost of the divorce and splitting assets and debts, many newly divorced individuals struggle because their ex-spouse may have been responsible for paying bills and saving. To overcome this challenge, consider the following helpful tips for saving and investing after a divorce.
Get a grip on your finances
When going through a divorce, assets accumulated during the marriage are separated. Men and women must take stock of their finances following this process. Essential tasks include updating estate plans, looking at insurance coverage, separating joint accounts and renaming beneficiaries of accounts.
Creating a budget is crucial. The goal should be to create a balanced budget that allows you to cover your needs and save for retirement. At times, it is necessary to rethink your current and future lifestyle. While changing a budget can be painful, it can help you save more. Making some cuts in the budget may be necessary, like downsizing to a smaller home.
It may be necessary to find a higher-paying job or go back to school to get a higher-paying job. Increasing earning power can help you have a more comfortable lifestyle, have money to invest, and make retirement savings easier.
Getting started with investments
Scrutinizing your budget should help you ensure you are putting enough money aside to retire on time. An employer-sponsored 401(k) plan can help you grow your money over time and often comes with the benefit of having contributions matched by your employer.
For those who have retirement savings, the time post-divorce may involve adjusting their risk level. Lowering the risk may protect assets, while taking on risk may be helpful if you have not invested long.
Although saving and investing after a divorce may be challenging, taking these steps will put you on a path to enjoying more financial security now and a comfortable retirement in the future. The first steps to healing your finances after a divorce are creating a budget, sticking to it and putting money in the right places.