Almost every person who goes through divorce proceedings is tired of dealing with accountants, lawyers and paying fees. But a number of financial issues exist after marriage, and it is important for newly divorced individuals to think seriously about their financial future. A divorce will inevitably change your personal finances, taxes, beneficiaries or insurance, so it makes sense to properly invest in a financial planning program to soften the blow of any negative repercussions.
Creating a Plan
The first stage of financial planning is to establish a plan and times it’s best to create it right from scratch. Understand issues such as your financial requirements as well as your existing budget. It’s also important to assess the types of expenditures you typically have along with factors like possible sources of income, cash inflow and outflow. Knowing what sort of financial planning is appropriate for you given existing liabilities or assets like a mortgage or a house. Financial planners assess whether their clients have enough cash or too much debt. Planners should also check to see if the client has sufficient cash to invest in a new financial plan. If a woman who has no prior work experience and does not have a job gets a divorce, she would need assets that can continue to provide income after the divorce. If there are no such assets, real estate planning might be necessary. The woman may need a job to provide an income source to support that investment.
One of the biggest elements about financial planning is your ability and willingness to undertake risk. If you already have plenty of income, risk is less of a constraint. However, since a majority of divorce cases entail loss of income or depletion of finances, situations are usually not so simple. With divorce cases being financially complicated, no one wants to consider making a budget because it’s a hassle. However – in the context of financial planning – budgets are imperative because they allow you to see how much you can afford to invest.
After establishing how much cash is available, people need to assess their risk tolerance. Married couples generally have less risk because they can pool two incomes. After a divorce, however, finances can be more volatile. Risk assessments are particularly important in real estate planning. It’s possible to be too risk averse and many people make the mistake of investing in very safe assets that generate low returns.
Unlike annuities, which are safe but provide small, predictable results, real estate can yield a higher return. Though high-return investments fluctuate in value, they can help divorced individuals regain some of their lost household income.
Life after divorce is never easy, but being in a marriage that simply doesn’t work can be infinitely worse. If you stuck in a relationship, and you’ve decided that divorce is the only solution, there is help available. The San Diego divorce lawyers at The Edmunds Law Firm bring over 33 years experience, training and success to resolve family law problems and issues for our clients. If you would like to set up a free consultation, just call our San Diego family law office at (760) 634-7630 or simply complete the contact form on our website.