Becoming newly single in the wake of a death or divorce can be a wake up call for many people’s finances.
Being able to survive on one paycheck instead of two could take months and even years of planning, but unexpected situations such as death and divorce may thrust these changes upon you abruptly. The experts at Broussard Poché, LLP have some advice for people looking ahead or preparing for the worst, think ahead and start now.
Here are a few financial tips to those who are dealing with divorce:
Stay within your Means
If you are going from two paychecks to one, you must cut your household budget accordingly. This may sound like a no-brainer, but many people have their bills and savings on “auto-pilot.” Review and manage a new budget so that your monthly expenses stay below your take-home pay. Remember you may have extra legal fees and mutual debt headed your way, you’ll need to be thrifty.
Get an emergency fund, right away. This fund should have accessible cash along with sufficient insurance coverage for possible unexpected events. A good idea is to have at least 2 months salary or more on hand for a cushion.
Look at your Portfolio
With a looming divorce, your investment portfolio and overall asset allocation will need to be updated. After speaking with your financial advisor, be sure to check in on your investments periodically.
Here a few things to keep in mind financially after the death of a spouse:
After family and friends are notified, you may want to contact the professionals who will help with the paperwork and financial matters. People on this list may include a funeral director, attorney, insurance professional, financial advisor, and accountant.
After those calls consider the following:
- Report the death to Social Security by calling 1-800-772-1213.
- Contact all insurance companies to file claims.
- Contact past employers regarding pension plans, and contact any IRA custodians or trustees. Review designated beneficiaries and post-death distribution options.
- Contact all credit card companies and let them know of the death.
- Also, a federal estate tax return may need to be filed within nine months of death.
When the unexpected happens it’s always a good idea to have a plan in place. If you need help getting your plan together, call the experts at Broussard Poché, LLP.