Aaron Katsman 58.
(photo credit: Courtesy)
Most women outlive their spouses. Divorce remains at record rates. It’s
important for a woman to be able to control her finances.
It’s hard enough to deal with a divorce on an emotional
level. But for many divorced women, their new financial reality can be
even more intimidating. Having to take control of family finances and trying to
get by on less income can be overwhelming. I recently met with an older lady who
just got divorced, and she told me that for the first time in more than 40 years
she needs to balance a checkbook.
Personal finance expert Trisha Wagner
says: “In fact, women are far more likely to suffer financially than men after a
marriage comes to an end. Twenty-seven percent of women versus 10% of men will
experience a significant decrease in their standard of living. For women who
decided to stay at home to raise their children while counting on their
husband’s income to provide financial security, establishing financial solvency
can be particularly challenging.”
Many women, by trying so hard to limit
the effect of divorce on children, put the financial aspects on the back burner.
By the time they finally get around to dealing with their finances, many feel
like they’ve dug a hole they can’t get out of.TAKE STOCK
The first thing
a divorcee needs to do is get her hands around the budget. This is the first
step toward financial empowerment. Many clients have told me that by doing this
relatively simple exercise, they feel they have gained a level of financial
control they never assumed they would have.
Whether you kept a budget
while married or not isn’t relevant. You are going to have a whole new set of
expenses and will probably have different sources and levels of income than you
Break your expenses down to those that are monthly and
those that are annual, one-time expenses. Once you have that organized, write
down all of your various sources of income, salary, child support, National
Insurance Institute payments, etc.
What’s important in budgeting is to
let your income drive your expenses. This means that once you know how much
money enters your bank account each month, create a budget that limits your
spending to the amount of income you have. While this seems basic, most
individuals let their expenses drive the process, meaning that they spend money
without discipline and hope that at the end of the month they don’t go into
Understanding your budget can also play a major part in the
asset division during your divorce proceedings.
A well-known family-law
expert recently told me much aggravation and time would be saved if women knew
how much money they needed to live on. With this information, women can
avoid spending years and thousands of dollars fighting for every last penny. If
you know how much you need to live, you’ll know how much money to ask
for.INVEST LUMP SUMS
As part of a divorce settlement, many women come
into large lump sums of money and have no idea what to do with it. It’s
important that this money is used to help meet any financial goals you may have.
If after doing your budget you see you will need more income to make ends meet,
then you will want to make sure your money is invested to maximize the amount of
income produced, while preserving or even growing your portfolio.TAKE
This new situation is actually therapeutic for many
women. According to family mediator Kathleen O’Connell Corcoran: “After
divorce, women experience less stress and better adjustment in general than do
men. The reasons for this are: (1) women are more likely to notice
marital problems and to feel relief when such problems end; (2) women are more
likely than men to rely on social support systems and help from others; and (3)
women are more likely to experience an increase in selfesteem when they divorce
and add new roles to their lives.”
Use this newfound independence and
take control of your new financial reality. Speak with a financial adviser and
create a plan that will enable you to get on with your life and be financially
firstname.lastname@example.orgAaron Katsman, a licensed
financial adviser in Israel and the United States, helps people with US