Article Turning a new page after a divorce

Tips for restarting your financial life when your marriage comes to an end

Divorce is never easy and there are important financial concerns you must address. But while legal marital separation can be very expensive for both parties, you can look at this milestone as a new opportunity to examine your personal finances and goals.

Key Takeaways:

Taking an active role in your finances can be especially crucial for women. As women's life expectancies increase and the rate of divorce for people over age 50 continues to climb,1 UBS research finds that eight in 10 women will find themselves solely responsible for their financial well-being,2 according to the UBS report "Own your worth—How women can break the cycle of abdication and take control of their wealth."

"Our research spanned many months and the results were clear—women who had found themselves single due to death or divorce overwhelmingly recommend other women focus on their financial situation and get involved today," says Carey Shuffman, Manager of the Women’s Segment, UBS. "Our goal was to mine their wisdom and share it so that all investors understand the importance of seeing the big picture in their financial lives."

While change is always challenging, there are a number of steps you should consider, both during and after divorce, to ensure your finances are off to the right start as you embark on your new life path.

Banking on a new financial life

Whether your marriage lasted months or decades, chances are you had somewhat intertwined finances and shared financial accounts. Going forward, you will be more self-reliant and independent with your money decisions than you were in the past.

Justin Waring, Investment Strategist Americas, UBS, stresses the importance of a formal legal agreement that smooths difficulties during the divorce process. "Make sure your financial advisor works with your lawyer to ensure that any agreement accounts for all of the financial implications—such as capital gains taxes or liquidity," Waring says.

When negotiating a settlement and plan for dividing assets, make sure to agree on a plan for shared family goals, such as college savings for your children.

"In divorce, funding family goals can be a bit tricky," Waring says. "Make sure you are still funding goals that the family as a whole wants to fund—for example, 529 College Savings plans—and consider doing it automatically. What you don't want is lots of money conversations with your former spouse."

Retirement and investment checkup

More importantly, you need to take stock of your new financial status. Divorce is likely to set you back a bit in your retirement plan, but it shouldn't derail your retirement plan completely. "Don't put your life on hold," Waring emphasizes. "Don't lose inertia and momentum on your savings goals or your path to retirement."

As you shift from a two-income household to one income, you may have to cut back on spending to stay in budget. Waring recommends that you "track your spending. Understand what is a must-have versus a nice-to-have. Look for areas of flexible spending you can cut if needed." Take some time to get adjusted to your new normal, he continues. "You may need to wait a couple of months after living single to fully recalibrate what your spending needs are."

Set new (and fun) financial goals

Planning for your new future can be stressful, so it's important not to only focus on the downsides. As you set up your financial plan, consider setting aside some of your budget to have a little fun and de-stress. Consider doing something you have always wanted just for you. But don't necessarily jump right into it, says Waring. "Studies show planning a trip and anticipating it can give you as much pleasure as going on the trip itself," he says. "Plan something that is going to be months away and prepare yourself for it to get your money's worth."

Meanwhile, set up and maintain a budget that matches your new optimal lifestyle, and don't forget about 401(k) contributions and other savings.

It's about you

The focus now is more on you. While it may have been painful getting to this point, you can indulge in your fresh start. As long as you don't lose track of your personal finances along the way, you may find yourself better prepared to live the life you've always dreamed of.

Are you ready to take charge of your financial future? Together we can find an answer. Connect with your UBS Financial Advisor