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Starting a new financial life after divorce

The end of a divorce presents men and women with a fresh start not only in their love lives, but also financially. Depending how ugly the divorce was, a former husband and wife might be starting on either solid financial ground, or shaky.

Lengthy, contentious divorce cases can leave former spouses trying to regroup financially after doling out a lot of their money and assets during the divorce.

Some financial experts suggest that, following a divorce, men and women need to create a new budget that more accurately reflects their current financial situation. To begin with this, they should look at their income sources and see what they have coming in. This likely changed significantly after a divorce.

Then, men and women must look at their spending habits and determine whether they still fit into their new budgets. Often at this stage, they will be forced to find areas where money could be spared and adjust their spending habits accordingly.

To coincide with a new budget, former spouses should open their own financial accounts, in addition to updating their estate plans. After all, a man or woman may have named their former spouse as a beneficiary in certain areas of their estate plan, which they would naturally want changed.

Insurance needs and debt is another crucial area in helping a divorced man or woman find steadier financial ground. Taking aim at debt and knocking it out helps rebuild a person's credit, allowing them a better chance at qualifying for crucial loans. As far as insurance goes, many spouses had relied on their better half for coverage. Being a new, single individual, men and women will want to make sure their insurance needs are covered.

Divorce is a time of great transition. However, diligently combing through your budget and employing careful planning can ease the transition greatly.

Source: FOX Business, "Starting Your Financial Life Over After Divorce," Andrea Murad, March 22, 2013

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