Divorce will have an impact on just about everyone’s finances. The extent of this impact depends on several factors. In some extreme cases, divorce could knock a person’s financial well-being completely down significantly.
Keeping control of money is one way to prevent this potential financial loss, along with understanding how to maximize a settlement’s value.
Do not dip into settlements
Money Crashers discusses the financial mistakes people often make after a divorce. The first is to make a plan regarding how to tackle the transition into single life.
Independence may feel foreign and uncomfortable to some people, especially those who became used to relying on a spouse’s income for necessities. In order to pay bills, a person may initially feel tempted to use their settlement to make ends meet. However, this just results in a fast depletion of savings.
Create strong budgets
Instead, implement a budget for use after the divorce. Identify sources of income and expenditures. Prioritize savings, even if they initially start out small. When in this transition period, try to avoid big purchases. Do not dip into the settlement to achieve these goals, especially the retirement fund.
Build support networks
On top of that, it is beneficial to build support networks. Divorces often make a person feel isolated and alone, which can contribute to poor decision making. Having a support team can help a person stay on track financially speaking, and can help that person maximize the value of their settlement.
Take the time needed to recover before making any rash decisions, and rely on the support network before moving forward.