If you’ve experienced the death or disability of your spouse or divorce, you know it takes a toll on your emotions and your finances. In marriage, it’s common for one spouse to manage the couple’s finances. Sometimes, tasks are split with one spouse handling investing and long-term financial decisions, while the other takes care of paying bills, balancing the checkbook, and other daily financial tasks. Either way, if one spouse dies or becomes disabled or the couple divorces, someone is left to take on new responsibilities at the worst possible time in life. How can you effectively manage your finances after a major life change like this?
Emotional impact
When life transitions occur, you are likely to face a host of feelings, including sadness, anger, anxiety, fear, and insecurity. Suddenly facing new financial responsibilities on top of this increases the stress because of concerns about making the wrong decision and losing money that you need. If you lost or divorced a spouse, you may have less income and assets and more expenses to set up a new household, get health insurance, and pay other costs associated with the death or divorce.
It’s critical to get help to deal with these feelings, whether that means turning to family, friends, support groups, or mental health professionals. You want to learn how to address the emotions so they don’t adversely affect your financial decision-making. It’s easy to panic and either rush to make financial decisions, or avoid them.
Financial professionals can also help you cope with your emotions by giving you a neutral outside perspective on the state of your finances and advice on what steps you should take. We all fear the unknown, so get answers to your questions to lessen your anxiety and build your confidence.
Financial impact
You don’t want to make significant changes to your finances before you’ve had a chance to analyze your situation and consult a professional. However, you do want to start educating yourself and laying the foundation to take control of your finances.
- Gather your financial records. Review your bank and credit card statements, income and expenses, loans, tax returns, and other documents. Write down your questions and go through them with financial professionals.
- Build a financial team. An accountant, bookkeeper, financial advisor, daily money manager, and/or attorney have their specific areas of expertise and may be able to help you with different aspects of your finances. Get recommendations, research their credentials, and interview them to ensure a good fit.
- Identify your concerns, needs, and goals. Where are you struggling? Are you living beyond your means and need help with budgeting? Do you have enough for retirement? Are you fearful of investing?
- Develop a plan for dealing with your finances. You want to address your day-to-day financial situation, budgeting, investing, long-term planning, and estate planning.
- Select representatives to act for you if you cannot. You must name a power of attorney and healthcare proxy to make financial, legal, and healthcare decisions for you if you become disabled.
- Give yourself credit. It’s not easy to learn new skills under stressful circumstances, especially if you are older. Be proud of your efforts and trust that things will get better.
Ideally, you want to avoid this scenario by taking an active role in all aspects of your financial life before something happens. However, if it’s too late for that, ask for help from the people in your life and professionals.
As a daily money manager, I assist individuals who have gone through major life transitions. I help them deal effectively with day-to-day financial tasks, either by teaching them what to do or managing it for them.
If you need assistance, contact me for a free consultation.
