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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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More often than not, women find themselves in dire need of solid financial advice after a divorce. Their ex-husbands generally make more money and have more financial power than they do. This can be quite unfair, particularly when women usually gain custody of the children and naturally incur higher expenses.

After a divorce, a woman’s cost of living can increase dramatically, hence the reason why court-ordered alimony and child support payments most often go to women; even so, research by Long Island University’s National Center for Women & Retirement Research reports that the average woman experiences a 45% decrease in her standard of living after going through a divorce. The average man, meanwhile, experiences a 15% improvement in his standard of living.

To combat this discrepancy and protect your financial future after divorce, follow these 5 steps:

1. Remove Your Name from all Joint Accounts

Whatever joint accounts you owned while married are no longer martial assets.  Mingled finances means trouble in the future if your ex spouse defaults on a loan payment, goes bankrupt, or becomes disabled. This can ruin your credit. Cut or minimize joint accounts you have with your spouse before the divorce. It might be too late afterwards.

2. Create a New Budget

Chances are divorce left your budget a little lop-sided, with much less monthly income to use in your current lifestyle. Now is the time to re-evaluate your budget, not months later when you’ve gotten deeper into debt and your credit has been ruined. There will be many new expenses you might have not thought about. These expenses can include:

The largest expense you may fail to consider are household expenses. Household can include utilities, mortgage/rent, service and repairs needed, insurance etc.

3. Build An Emergency Fund

Build an emergency fund from any cash you receive from your divorce. An emergency fund should equal 3-6 months of your living expenses.  We recommend 6 months because you are now single and need an even bigger cushion if you are not able to work or an emergency occurs.  An emergency fund also helps lesson the dependency of using credit during financial hardships. Not to mention you will sleep better at night knowing you have extra cash stashed away.

4. Invest Assets

Once you have established your emergency fund then invest all leftover cash.  As a newly divorced individual you have a unique opportunity to take charge of your life and secure your financial future. Investing a substantial portion of your settlement is critical to achieving your long-term financial goals, such as sending your children to college, purchasing a home or retiring.

If your settlement includes securities such as stocks, bonds or mutual fund shares, you may need to restructure your portfolio to more accurately reflect your current needs and future goals.

5. Protect Your Risks

One of the most important insurances to review is medical insurance. If your husband works for a company with 20 or more employees, federal law requires the company to let family members continue coverage under the group plan for up to three years after the employee dies or divorces. You must pay the entire cost of the premium, which can be surprisingly expensive. If you're in good health, though, you may find a lower-priced policy on your own.

First of all, just as with any other property, you need to determine who will be the owner of your various insurance policies. Whoever is the owner of your policy can name a beneficiary. Ideally you should own a life insurance policy on your ex husband so that alimony and child support can continue even if he dies. The same holds true if you are paying alimony and child support!

Related Articles:

Protecting Your Personal Finances Through Divorce

When Your Ex Screws Up Your Credit

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