Entering into a new chapter after a divorce can be a little daunting, especially when thinking about finances. You have already conquered the hurdle of separating assets and determining the best possible outcomes for your family. But what about the best possible outcome for you?
The last thing you may want to think about is how to set yourself up for financial success, not only short-term goals but into retirement. Women tend to shy away from this subject post-divorce and have less confidence in this subject. A 2021 academic paper from the Global Financial Literacy Excellence Center (GFLEC) found that about one-third of women perform worse than men on a basic test of financial knowledge and their lower financial literacy can be explained by a lack of financial confidence. The combination of both financial literacy and confidence are important elements for a woman to build wealth.
Although starting again financially seems like another huge feat, it is actually a hurdle you are more equipt for than you think. With a little time and a few resources, you can gain the confidence needed to become empowered toward financial stability in a time when you are feeling unsure.
First Step: Organizing Short and Long-Term Finances
“Where do I begin?” Getting organized can help you gain traction and independence. Think of this step as making it all about you and having everything put in your name.
Establish your own financial identity. Put bank accounts and credit cards in your name. Choose the financial professionals you want to work with as your goals and preferences may not be aligned with the one your ex chose.
Review all beneficiaries on accounts. Update legal documents such as trusts, wills, and powers of attorney.
Find a trusted financial advisor. Choose someone who will align with your goals and educate you along the way helping build your confidence and get you excited about your future goals.
One Step Further: Financial Empowerment
In your past relationship, you may not have needed the knowledge or understanding of how to build a portfolio, invest, and/or build retirement. It can seem intimidating, but women know a lot more than they believe and can easily brush up on their financial know-how.
Consider adding these 4 habits into your weekly and monthly routine to brush up on your financial wisdom and boost your confidence:
- Read – Read one finance article a week to learn more of the basics and financial vocabulary. This will help when meeting with your advisor. (If you are on LinkedIn or other social media platforms start following financial accounts, news, and tips.)
- Phone a friend – If you know someone who is financially adept start to ask them questions. Ask to meet for coffee and teach you how to understand investments or create a budget.
- Create a budget – It really can be as easy as creating a chart of money going out vs. money coming in monthly. Do the best you can and by beginning there you can start to envision and allocate for short-term and long-term goals.
- Give yourself a pat on the back – Feel confident that you are close and will get there. You just went through a difficult chapter and it’s ok to give yourself credit if you are working to meet your budget goals, educating yourself, working toward a great career, and consistently meeting with your financial advisor.
Bucher-Koenen, Tabea, Alessie, Rob, Lusardi, Annamaria, and van Rooij, Maarten. “Fearless Woman: Financial Literacy and Stock Market Participation.” Global Financial Literacy Excellence Center, March 2021.