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From The Experts

We've gathered knowledgeable, dedicated divorce experts from a variety of fields to lend their advice and perspectives. Our experts include lawyers, healthcare professionals, certified professionals, and everyday women with insight into the topics that will help you stay empowered.

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Many women are able to emerge from divorce with a substantial cash settlement and/or alimony. But only a rare few are able to manage that money correctly and sustain an affluent lifestyle. I wrote about this subject once before, focussing on why many divorcees who think they've hit the jackpot with a big settlement, need to get back to work.

Here are the three most common financial mistakes I've seen wealthy women make after divorce:

1) Not returning to work: This misstep causes the most problems for wealthy women after a divorce. Unemployment produces a triple burden to your budget: you have no income, so you're depleting your savings; you have more time to spend lunching or shopping with friends because you're not in your office during the day; and you have to pay for your own benefits like health insurance and retirement plans.

Combined, these factors wreak havoc on your budget and create a huge burden on your investment portfolio. If your portfolio stops growing, it's very difficult to keep up with inflation and maintain a secure future. Consider getting a job.

2) Not curtailing your spending: Remember when your friends in their forties told you losing weight after age 40 is very difficult because their metabolism seemed to have dipped and they had no time to exercise. Likewise, after attaining a certain age, and becoming accustomed to a nice standard of living, it's very hard to curb spending.

I work primarily with affluent women and most of my clients have helped create the wealth that was accumulated during the marriage. These women are adept at handling money, having earned large salaries and managed large households for years. But even many of these women find it difficult to maintain the lifestyle they enjoyed during their marriage with just a single family income.

What's more, even they have to face that by age 60 they're burned out and need to slow down. If they saved and invested wisely, they can do that with more ease that those that have to work to age 65 or 70 to catch up on savings.

My point? Pace yourself. Cut back on spending now so you'll have a bigger nest egg to sustain you in later years.

3) Investing too aggressively: Time and time again I've seen women make bad risks in hopes of getting astronomical returns on their investment. During the technology craze of 1998 to 2001 women came to me looking for the 50 percent returns their friends were getting. I would explain the risk and suggest more moderate ideas, but they invariably went to other brokers who had them invest aggressively in technology companies.

A few years later many came back to me with only half of their original funds; some didn't even have that much. The combination of overspending and a bad market took their life savings down to nothing in three years.

It happened again during this most recent real estate bubble. I saw divorcees buy property in Vegas and Florida and try to flip it for investment. Most lost money and were happy just to get out with a just a 30 percent hit — sometimes representing six-figure sums.

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